Preamble

The House met at half-past Eleven o'clock

PRAYERS

[Madam Speaker in the Chair]

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

The Minister was asked—

Pig Farming

Mr. Shaun Woodward: What proposals he has to promote pig farming in Britain. [98836]

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): In discussions with the representatives of the British pig industry, we have developed an action programme aimed at helping pig producers through this very difficult period.

Mr. Woodward: Every week, I visit in my constituency pig farmers who are suffering and in danger of going bankrupt—some have gone bankrupt. Two of them, Jamie Bell and Christopher Maughan, have given me their figures, which show the serious nature of the problems that they face. Mr. Maughan has a pig farm that produces 5,000 pigs a year. Last year, he lost £25,000. He cannot go on in business for much longer. He will very probably have to make three members of his staff redundant. He is aware that the Government have introduced regulations to help with disposal that allow £5.26 per pig. He urgently requires compensation to stay in business, but he feels that the Government are ignoring his protestations and the problems of everyone else in the pig industry who need help from the Government now before they go bankrupt. What do the Government intend to do?

Mr. Morley: There is no doubt that the pig industry faces serious problems. The regulations on offal control were introduced in 1996 for an important reason: they were one of the BSE control measures. The Government have introduced measures to assist the industry. We have talked to retail groups about progress on their labelling commitment. We have also proposed new standards of labelling, which have gone out for consultation. An extra £5 million of marketing aid has been provided on top of the £1 million already made available. It has been made clear that we expect the pig industry to have first call on that marketing aid. We are discussing meat and bonemeal controls with the Spongiform Encephalopathy Advisory Committee and also what impact they have on the pig

industry. We are doing everything that we can to assist, within the state aid rules. We are constrained because we must work within those rules.

Mr. Dale Campbell-Savours: Is not the simple truth that, if the British consumer started buying British pigmeat in the form of bacon and other pig products, the crisis would end? It is in their hands. They have a good excuse for buying British, which is that British pigmeat is produced to higher welfare standards.

Mr. Morley: I entirely agree with my hon. Friend. At one stage in the current down cycle, British pork and pig products were attracting a 25 per cent. premium compared with other European prices. That was undoubtedly due to the premium for higher welfare and quality standards. We believe that the way forward is through labelling and marketing. It is important to ensure that consumers have that information, so that they can use consumer choice to support our industry and the standards that it applies.

Mr. Malcolm Bruce: Following the point made by the hon. Member for Workington (Mr. Campbell-Savours), does the Minister accept that supermarkets are not showing clearly the source of pigmeat from this country, or, indeed, from where it comes? Unigate, which is the biggest wholesaler of pigmeat, is manipulating the market to depress the price and, in effect, destroy home production by controlled management of imports, which it says it will increase to 50 per cent. of its entire supply. Is that fair competition, and should it be investigated?

Mr. Morley: As the hon. Gentleman may be aware, the issue of supermarkets and competition is being investigated by the Office of Fair Trading, and a report will be published in due course. On the wider issue, we do not want labelling used in a way that misleads the public on the origin of pigmeat. That is why we have put new regulations out for consultation. The proposed regulations would make it clear that misleading labelling will not be tolerated. We have also seconded a full-time member of staff from the Ministry to work with the pig industry, to evaluate and monitor labelling claims and see how retailers are doing it.

Mr. Malcolm Moss: After telling the House back in July that he had letters on his desk ready to send to local authorities exhorting them to buy British pork, why did the Minister wait four months before sending them? Has not his incompetence and inaction contributed to the continuing losses in the pig industry now running at over £2 million a week?

Mr. Morley: I welcome the hon. Gentleman to the Opposition Front Bench. We look forward to discussing a range of issues with him. My right hon. Friend the Agriculture Minister has been dealing with this issue for a long time as part of a co-ordinated campaign to raise the profile of the welfare and quality standards of UK pigmeat. I do not think that any other Minister in any other Government has done as much as my right hon.


Friend to draw that to the attention of industry and retail groups and individual MPs, who have a role to play in raising this issue with their local suppliers.

Mrs. Diana Organ: What assessment has my hon. Friend made of the impact of the proposed introduction of the integrated pollution prevention and control directive in 2002 on pig farmers and other intensive white meat producers?

Mr. Morley: My hon. Friend raises an important issue affecting the meat industry, pig farmers and poultry units. Discussions are taking place within Government about the implications of those IPPC charges.

Exports

Miss Anne McIntosh: What plans he has to press for compensation for British farmers for loss of exports to France over recent months. [98838]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): Compensation is a matter for the courts.

Miss McIntosh: Farmers in my constituency are rapidly losing patience with the Minister. They are perfectly entitled to compensation. I know that farmers have taken up the matter personally with the Minister. Can he now tell the House which agency, or which member of his Department, is dealing with it—or is he going to tell us that the love-in between Britain and France has extended to the point at which our farmers will be denied the compensation to which they are entitled? It should be borne in mind that the French are notoriously slow to accept that they must pay compensation, and even slower to pay the compensation to which our farmers are entitled.

Mr. Brown: If the hon. Lady's constituents are entitled to the compensation to which she says they are entitled, they can obtain it through the courts.

Mr. David Drew: I certainly do not condone the action of the French, but is it not a question of rebuilding confidence, and is not the best way to rebuild confidence to rebuild the local food chain? Would my right hon. Friend care to comment on ways in which we can seek local marketing solutions?

Mr. Brown: I am strongly committed to helping the industry to market its way through the present difficulties, and I believe that joining up the food chain is one way of achieving that. Like other Ministers, I have made a number of visits to distributors, retailers and producers to demonstrate our commitment to that approach.

Mr. Colin Breed: The Minister is right to pursue compensation claims. I hope that he will continue forcefully to do so, and that the matter will ultimately be resolved. What farmers now want more than anything, however, is the opening of their export markets in other spheres, such as the Commonwealth. Has the Minister engaged in any discussions with his colleagues in the Department of Trade and Industry about a specific export drive to those markets? If not, what measures is he

taking to encourage other countries—now that, hopefully, we have persuaded France—to lift their beef bans, thus providing farmers with more immediate support?

Mr. Brown: The first thing that we must do is ensure that the decision made last November to introduce the date-based export scheme is implemented properly throughout the European Union, and that is an immediate objective of mine. Next Wednesday, the Prime Minister will host a meeting of all who have an interest in beef exports to discuss strategies and, in particular, to explore ways in which the Government can help.

Mr. Barry Jones: Does my right hon. Friend recall my bringing to him recently a deputation of representatives from four farms in my constituency? We are very grateful for the hour that we spent with him. Does he recollect that my constituents told him of their fears for the beef industry, as well as for the sheepmeat and dairy industries? That conversation emphasised the difficulties of the family farmer. How has my right hon. Friend attempted to help family farms so far, and how might he do so in the future?

Mr. Brown: I am pleased that my right hon. Friend was able to bring a delegation of farmers to see me. I consider my contacts with ordinary working farmers to be extraordinarily important to my stewardship. Those farmers did raise the question of support for family farms, and we explored the possibility of support measures under the common agricultural policy, which is the overarching policy instrument. But I also look to the rural development measure, which may provide new ways of producing income streams for family farms.

Mr. Dafydd Wigley: Does the Minister agree that, although compensation may be necessary to deal with what has happened in the past, we should consider other measures, when no compensation questions arise, so that our farmers can export not only beef but lamb to France and other European Union countries with no let or hindrance? Is progress being made to ensure that lamb exports, in full-body form, are able to reach all destinations, including France?

Mr. Brown: The right hon. Gentleman is right: far and away the best solution for the livestock industry is to return trading conditions to normal as quickly as possible, and that is the objective of my strategy. We need to be able to market our way through the present difficulties, and the Government will do all that they can to assist. That includes dealing with the matters raised by the right hon. Gentleman.

Mr. David Curry: I refer the Minister to the explanatory note which is attached to his press release of two days ago—in which he refers to the Commission's declaration on the labelling of exports of British beef—and in particular to the sentence which says:
This will enable them"—
the other member states—
to require the labelling on their own territory of British beef, if they so wish.


What steps will the Minister take to ensure that member states do not so label British beef so that it represents a large invitation to the consumer not to buy it?

Mr. Brown: That would not be permissible. I deplore the irresponsible statements that have come from Opposition Front-Bench spokesmen suggesting that, somehow, a British label is a stigma on what is a fine product and among the safest in Europe. Labelling is a clear condition of the date-based export scheme. It was also a clear condition of the certified herd scheme, which was brought into being by the previous Government.

Mr. Michael Jabez Foster: I congratulate my right hon. Friend on his constructive approach and, in particular, on the fact that he has agreed to the labelling of British beef. Can that be reciprocated by our clearly labelling French products in our shops so that our consumers can decide whether they wish to buy products that are of a lower standard or have not been produced to the same welfare standards?

Mr. Brown: The Meat and Livestock Commission's assured British meat schemes provide a way for domestic consumers to consume to the highest United Kingdom standards. Under consideration in the EU is a beef labelling regime which would apply throughout the EU. The United Kingdom, French and German Governments are supporters of that regime, as is the Commission.

Mr. Tim Yeo: Now that the European Commission has confirmed that country of origin labelling within the EU is lawful, why does the Minister think it right to require British beef to be labelled as British when it is sold in France, but wrong for French beef to be labelled as French when it is sold in Britain?

Hon. Members: Answer!

Mr. Brown: I have just answered that question. If Conservative Members listened to the answers instead of just trying to work out how to ask the same question, we might make a bit more progress. I thought that the hon. Gentleman was in favour of labelling schemes. He has wobbled about on this issue like a demented political yo-yo.

Fur Farming

Maria Eagle: What plans he has to ban fur farming in Great Britain. [98839]

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): A Bill to ban fur farming in England and Wales was introduced on 22 November. I understand that the Scottish Executive will be introducing a separate Bill to extend the ban to Scotland.

Maria Eagle: I thank the Minister for the part that he has undoubtedly played in persuading the Government to take up my private Member's Bill from the previous Session, which was unfortunately blocked on Report. Does he think that the fur farmers now also support the ban, although they did not at the beginning of the last

Session, and is he surprised to hear the Conservative party now calling for compensation for every type of farmer but fur farmers?

Mr. Morley: I pay tribute to my hon. Friend's work in promoting her private Member's Bill. It was through that promotion that we had negotiations with the NFU and the Fur Breeders Association. The Bill that we are promoting is an enabling Bill, which will make provision for compensation. We have had a letter from the Fur Breeders Association which makes it clear that it does not want to be kept in limbo and, if the measure makes provision for compensation, it would like to see that progress.

Mr. Nigel Evans: There is a mink fur farmer in my constituency, so I am interested in what the hon. Member for Liverpool, Garston (Maria Eagle) said because I am keen that there should be full and proper compensation for my constituent. Can the Minister give an assurance that, if compensation is not deemed sufficient, an independent committee or arbitration system will be established so that fur farmers can obtain independent clarification on what compensation they deserve?

Mr. Morley: I can give the hon. Gentleman that assurance. There will be two provisions, one for independent arbitration agreed by both sides and, if that is not agreed, a fall-back provision for binding arbitration from the Lands Tribunal.

Common Agricultural Policy

Mr. Phil Sawford: What action he has taken to compensate UK farmers for the effect of the strong pound on the value of payments under the CAP. [98840]

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): Up to £264 million in agrimonetary compensation will be paid to livestock and arable farmers starting this year, and a further £132 million over the next two years. That is on top of £133 million in such compensation paid to beef and sheep producers in 1997 and 1998.

Mr. Sawford: Hard-pressed farmers in my constituency will welcome any help that my right hon. Friend can give. Although agrimonetary compensation is complex, it represents real money for real farmers. Does my right hon. Friend agree that it is a sad reflection on the previous Government that they did not pay such compensation to farmers when they had the opportunity to do so, and that the Conservative party is no friend of the British farmer?

Ms Quin: I agree strongly with my hon. Friend. Agrimonetary compensation is an important benefit for British agriculture. My right hon. Friend the Minister was successful in persuading our partners of that, and also in ensuring that some of the money would be obligatory and that farmers would benefit directly from it.

Mr. John Bercow: In reflecting on the plight of British farmers, does the right hon. Lady agree


that entry into the European single currency at exchange rate mechanism mid rates would be catastrophic for British agriculture?

Ms Quin: I seldom agree with the hon. Gentleman about any of the points that he makes, especially on European issues. Stability in financial arrangements is tremendously important for agriculture. If we are not in the single currency, it is important to do what the Government have done and ensure that farmers in this country do not lose out, as they would have done had we not introduced the compensation measures that have been effected.

Farmland Prices

Mr. Alan W. Williams: What has been the overall percentage change in the price of farmland since May 1997. [98841]

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): The estimated average price of agricultural land sold in England fell by 5 per cent. between 1997 and 1998.

Mr. Williams: I am a bit surprised by that answer. A recent survey by the Royal Institution of Chartered Surveyors shows that, in the last quarter, land prices increased in England by 6 per cent. and in Wales by 13 per cent. Will my hon. Friend confirm that it is the Government's policy to join the euro when the time is right, and that, when that happens, we will adopt European interest rates, which are currently 3 per cent? That huge fall in interest rates will mean that house and land values are bound to rise. Is it not in the interests of British farmers that we join the euro?

Mr. Morley: My hon. Friend makes an important point on the euro. There is no doubt that joining the euro would bring many benefits to agriculture, through lower interest rates, a stable exchange rate, and especially in respect of agriculture prices and agrimonetary compensation. Those matters will have to be considered carefully. Ultimately, the British public will make the decision in a referendum. The Government are considering the matter on the basis of what is best for our country and our economy. In that respect, farmers are not well served by the Conservative party, which made it clear that it would never go into the euro within an arbitrary five-year period, even if was absolutely clear that it was in the interests of this country and of agriculture to do so.

Mr. Tony Baldry: If agriculture prices are increasing, it is nothing to do with farming and everything to do with proposals to build 1.1 million new homes in Oxfordshire and the south-east. Whenever agricultural land becomes available, builders buy up options and drive up the price of farmland. In counties and constituencies such as mine, there is a crazy situation in which farmers are driven out of business through the Government's policies, and any spare fields will be built on, cemented and concreted in the next 20 or so years. That is a disaster for the shire counties. When will the Government wake up to the devastation that they cause to rural England?

Mr. Morley: The hon. Gentleman makes an inaccurate point. Many indicative housing figures were far higher under the previous Conservative Government; they have been scaled down under the Labour Government. Whatever happens to planning policy in future, planning law will apply to farmland. Buying farmland is no guarantee of permission to build on it.

Mr. Peter L. Pike: Is it not a fact that the land value of difficult farmland in the hills—and in the Pennines, in constituencies such as mine—has fallen the most? However, that trend was evident under the previous Government, who showed no support at all for farmers of difficult farmland.

Mr. Morley: My hon. Friend, who represents large areas of disadvantaged farmland, is absolutely right. The causes of the changes in the price of farmland are complex, and there are a number of reasons for that. In some parts of the country, the price of farmland is holding and, as my hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams) said, it is increasing in some cases. There are different demands, different types of farm and different sorts of land and we have to take those important factors into account in developing a coherent rural approach. That is why we shall be giving them a great deal of thought in the forthcoming rural White Paper.

Beef

Mr. Julian Brazier: What steps he is taking against the restrictions imposed by German Lander on British beef. [98842]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): I have spoken and written to the German Health Minister about the German ban. The German Minister has assured me that the German Federal Government are taking the necessary legal steps to lift it, but—because of the necessary constitutional procedures in Germany, including the need for agreement by the Länder—it will not be possible to lift it quickly.

Mr. Brazier: Surely, then, the position is that the House and the British Government can be overruled by European rulings but the German Federal Government can shelter behind the German constitution in allowing the Lander flagrantly to break European law, to the detriment of British farmers. Given that the Government have made much, somehow or other, of their fairly modest efforts with the French, is it not time that they matched that by taking legal action against the Germans?

Mr. Brown: The hon. Gentleman is wrong. This is a matter of European Union law, and the law applies in Germany in exactly the same way as it applies in France and throughout the rest of the EU. The German Federal Government have been completely candid with the United Kingdom Government. They have explained to us how their procedures work and why it will take time to get the ban lifted in Germany. I believe that the German Government are proceeding in good faith in this matter, but they have to deal with regional authorities controlled by parties that are


different from those in the federal Government. He will accept that, sometimes, opposition parties can behave unreasonably towards the party in power.

Charlotte Atkins: Does my right hon. Friend agree that we shall not be exporting any beef, either to France or to Germany, unless there is consumer confidence in those countries? Is not the best approach to ensure that we explain our BSE safeguards so that the French ban is lifted, with the support of the French and German Governments? Otherwise we might have the ban lifted, but no one will be eating British beef.

Mr. Brown: My hon. Friend is exactly right; that is the approach that the Government are taking. We are explaining the powerful safeguards—which sit around the date-based export scheme—that are in place in this country. We are taking our potential customers into our confidence because we want them to be our customers. We want them to buy our beef.

Mr. Edward Leigh: Past constitutional disputes between the German Federal Government and the Länder have taken years to resolve. How long will it take to resolve this issue?

Mr. Brown: This issue is a matter of European Union law. If we cannot get it resolved by discussion, it will have to be resolved by law. Again, we shall look to the Commission to stand our corner.

Food Safety

Mr. Patrick Hall: How much his Department spent on food safety and standards surveys in the last year for which figures are available. [98843]

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): The Department has a wide-ranging food surveillance programme to protect consumer safety, food authenticity and the nutritional quality of the UK diet. During 1998, it spent more than £10.5 million on those surveys, carrying out more than 190,000 analyses on more than 63,000 food samples.

Mr. Hall: I thank my right hon. Friend for her helpful answer. Does she agree that what she has outlined represents the sensible steps taken by the Government—as promised at the general election and including the establishment of the independent Food Standards Agency—in order to make our food safe and more nutritious, and to restore consumer and producer confidence, thereby strengthening the economy and boosting our exports of food products?

Ms Quin: My hon. Friend makes some important points, particularly on building consumer confidence and ensuring consumers that we are taking the issue of safety standards as seriously as we are. I am delighted that, just before Prorogation, the Food Standards Act 1999 finished its passage in the other place and in the House, after we considered further amendments, paving the way for the agency's early and successful establishment.

Mr. Peter Luff: As the Select Committee made clear in its report, successful

establishment of the Food Standards Agency—which the Minister just mentioned—depends very much on effective leadership. Is she able to confirm reports in the Financial Times that Professor John Krebs will be appointed to run the new agency?

Ms Quin: As I am sure that the hon. Gentleman will appreciate, the appointment is a matter for the Department of Health. We are very confident, however, that the arrangements being made for the agency's establishment will help to ensure consumer trust and confidence, about which the Agriculture Committee and other hon. Members have been very concerned. We are also pleased that both the Government and the agency will be committed to openness and accessibility of information, as the sharing of information is a very important part of building consumer confidence.

Mr. James Paice: On the subject of food safety, will the Minister tell us whether it is true, as reported in The Mail on Sunday—[Hon. Members: "Oh!"] Labour Members will undoubtedly be delighted to hear whether it is true that European inspectors have not inspected a single Thai chicken factory. Is it also true that Ministry of Agriculture officials have inspected Thai chicken farms and found problems that have not been resolved? How much longer will British producers have to compete with lower standards overseas, and British consumers have to accept importation of sub-standard products from countries that do not have British standards?

Ms Quin: The hon. Gentleman does not seem to understand that national and Commission experts work closely together, and write reports for each other, so that informed decisions may be taken on suppliers from third countries to European countries. I confirm that our officials and Commission officials have both investigated those issues, to ensure that European consumers are protected. The situation, however, is on-going: we cannot have a once-and-for-all investigation. We have constantly to make checks—not only in liaison with authorities in the countries concerned, but in investigations made by Commission and national authorities—and to monitor, in the interests of our consumers and European Union consumers generally.

Labelling

Mr. David Ruffley: If he will make a statement on the labelling of imported agricultural products. [98844]

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): Food labelling rules are harmonised at European Union level and apply to home and imported produce alike. We are pressing for a number of improvements in European Union rules and consulting on improved national guidelines aimed at clamping down on labels that mislead consumers about country of origin.

Mr. Ruffley: Following discussions that I had last Friday with pig farmers in my constituency, at Battisford, I shall ask the Minister a simple question. Will the


Government reform food labelling regulations to make it illegal for labels to describe food as British when that food has not been reared or grown in Great Britain?

Ms Quin: The hon. Gentleman should know that we are going through that process now, in consultation with the industry and the European Commission. Labelling is partly a matter over which we can have national influence, and partly one where there is European Union responsibility. I pay tribute to the work of my right hon. Friend the Minister and the Ministry in promoting clear and accurate labelling. I have discussed this matter with the pig industry recently, and we are determined to clamp down on misleading labelling and to make sure that food that is described as British actually is British.

Gillian Merron: Is my right hon. Friend aware that many of my constituents would like to buy British products in recognition of the higher quality and higher welfare standards of British food producers, but find it difficult to do so because of labelling that implies that a product is British when it is not? What can we do to assist consumers in my constituency and across the country?

Ms Quin: We hope and expect that the verification officer we have appointed precisely to deal with this issue will be successful in his work. He has already had important meetings with supermarkets and others in the food supply chain. The Government's record on labelling is excellent and contrasts strongly with the lack of effort of the previous regime to get labelling systems in Europe or to consolidate labelling systems at home.

Mr. Tim Yeo: Will the Minister confirm that much of the meat sold in this country—whether it is poultry meat from the far east, pigmeat from Holland or Denmark or meat from illegally fed cows from France—is produced under conditions which are against the law here? Why do the Government not think it necessary to draw that to the attention of consumers on the label?

Ms Quin: I suggest that the hon. Gentleman checks on the rules because he does not seem to know them. Meat coming into Britain has to conform to European standards. I listened carefully to the hon. Gentleman on the "Today" programme a couple of days ago, and he simply does not seem to understand the moves that have already taken place in the European Union on the labelling of beef, for example. I suggest that before he asks other questions on this subject, he checks out the facts first.

Specified Risk Material (Enforcement)

Mr. Paul Marsden: What measures he is taking to ensure that controls on specified risk materials do not place additional burdens on the livestock industry. [98845]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): The Government have further deferred plans to charge industry for the cost of specified risk material enforcement until 2002–03 at the earliest. In

addition, the meat industry red tape working group is examining the impact of the SRM controls in the industry. I expect its report shortly.

Mr. Marsden: Hard-pressed farmers in Shropshire will welcome the waiving of SRM charges and the fact that the working group is reviewing farming regulations. Does my right hon. Friend agree that the Government seek to reduce red tape for farmers, unlike the last Tory Government who, while they scrapped 77 MAFF regulations, introduced 331 new ones? Do not the Tories say one thing and do another?

Mr. Brown: And they then change their minds and say something else—we are all familiar with the scenario. During my stewardship of this office, I am determined to bear down on the regulatory burden on the industry and to make certain that regulations are proportionate and justifiable.

Mr. Christopher Gill: The Minister will be well aware of the consequences of the regulations imposed on the beef industry, as they affect the pig industry—the pig industry has been the innocent victim of controls imposed on the beef industry. He has been given a long period of notice. If he would authorise the dedication of pig-rendering offal plants, it would help the industry financially and would mean no extra cost to the taxpayer. However, at least 18 months after this suggestion was first made, there has been no progress. Does he recognise that by the time there is any progress, a lot of the pig farmers to whom my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley) referred will have gone out of business? This inaction by the Government is not acceptable.

Mr. Brown: It is important to point out to the House that the regulations that the hon. Gentleman denounces were introduced in 1996 under the Conservative Government. Nevertheless, as he knows, I think he is on to a good point, but it is not fair to say that the Government have done nothing. I have already approached SEAC—the Government's advisory committee—once on the issue to see whether the rules could be relaxed, so that some commercial value could be returned to the sector for the pig farmers. SEAC said no, so I have gone back to it, together with the Meat and Livestock Commission, to try to find some way to get trade back in a way that is acceptable to the Government's scientific advisers. The report that I have submitted with the MLC will be considered by SEAC at its meeting this month—by which I mean November.

Food Hygiene Education

Helen Jackson: What discussions his Department has had with education authorities regarding food hygiene education in schools. [98846]

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): The Department is collaborating very closely with the Health Education


Authority and others on the development of food hygiene teaching resources, which are being supplied free to all UK primary and secondary schools.

Helen Jackson: When I was at school, we had domestic science once a week—that is, the girls did. Does my right hon. Friend agree that one of the potential new millennium nightmares is of a generation living from cradle to grave on pre-packaged, pre-cooked meals? Does she agree that her answer shows that the Government are working in a joined-up manner to promote healthy living and food safety, in the wake of the disastrous scares—including those involving salmonella, E. coli and BSE—of the past few years?

Ms Quin: I thank my hon. Friend for her question and her comments. She must have gone to a more enlightened school than I did, because I had to choose between domestic science and Latin. Domestic science was not compulsory, but it would have been a good thing. [Interruption.] I am not sure that either my Latin or my domestic science is up to standard.
I strongly endorse my hon. Friend's comments about the awareness of hygiene and fresh food issues. The programme that we have introduced—and especially the efforts of my predecessor, my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker)—will be important in bringing to schools, especially secondary schools, varied and valuable information about food hygiene and related issues.

Mr. Crispin Blunt: Late last year the European Union suspended the use of zinc bacitracin in animal feed, which has led to the wholly unwelcome consequences of increases in the incidence of necrotic enteritis and cholangiohepatitis in poultry and—with implications for food safety and children—to farmers having to turn to the use of amoxycillin and penicillin to keep their poultry free of those—

Madam Speaker: Order. I know that the hon. Gentleman has been keen to get in on questions that relate to the subject that he is speaking about, but this question concerns food hygiene education in schools.

Mr. Blunt: I believe it is relevant.

Madam Speaker: I am not sure that it is, and that is the point that I am making. I would be grateful if we could continue with food hygiene in schools.

Mr. Blunt: Is the increased use of penicillin and amoxycillin in poultry as a result of the Government's policy a good thing for food hygiene in schools and, if not—

Madam Speaker: Order. That was not a good try, so we will find somebody else.

Common Agricultural Policy

Mr. David Borrow: What assessment he has made of the annual cost of the common agricultural policy to (a) consumers and (b) taxpayers in the UK. [98847]

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): The cost of the CAP in 1998 was £6.7 billion to consumers and £3.4 billion to taxpayers, equivalent in total to around £3.30 per person per week.

Mr. Borrow: I thank my hon. Friend for his answer. Does he agree that the existing production-based support system under the CAP is bad for consumers because it means that we pay excessive prices? Is it not also bad for the taxpayer, who is paying those sums for the CAP? Does my hon. Friend agree that it fails to meet the Government's policy objectives because it does not support the farmers in most need of support, especially those in upland and other marginal land? Is there not a growing consensus in favour of a reform of the CAP that would move it away from production-based subsidies towards a system that met social objectives?

Mr. Morley: I strongly agree. We have made some progress with Agenda 2000, which has reduced costs to consumers by about £1 billion. Clearly, however, there is much more to be done. We believe that we must move away from production-based support—which increases costs to consumers, distorts markets to the disadvantage of farmers and does not always help those in most need—to more broadly based support that would assist agri-environmental programmes. We think that a broader, rurally based policy would be more beneficial for the rural economy—and, in the longer term, for farmers.

Oral Answers to Questions — SOLICITOR-GENERAL

The Solicitor-General was asked—

Crown Prosecution Service (Complaints)

Mr. David Kidney: What changes he intends to make to the Crown Prosecution Service's complaints procedure. [98866]

The Solicitor-General (Mr. Ross Cranston): The Crown Prosecution Service has a three-tier complaints procedure which is accessible and well publicised and ensures that a full and fair investigation takes place. It is speedy and ensures that when a complaint is found to be justified, prompt action can be taken. The CPS complaints procedure complies with the Government's service first standards. My hon. Friend will be pleased to know that last year the CPS in the Staffordshire area achieved a 90 per cent. response rate within 10 days of a complaint being received—better than the national average.

Mr. Kidney: I thank my hon. and learned Friend for that answer. Yes, I am aware that the CPS in Staffordshire is good at dealing with complaints, but would it be fair to say that at the national level its attitude has been a trifle defensive? Does he agree that complaints should be


viewed positively, as part of the management information that any organisation needs to improve its service? I hasten to add that I would say the same about people who make other comments, including compliments. Does my hon. and learned Friend agree that the CPS should change its attitude towards making use of the information that comes from the public in those forms?

The Solicitor-General: I think that the record is good, but it can be improved. As a result of the changes in the inspection arrangements, the inspector will examine the complaints procedure and ensure that it is up to standard. I take my hon. Friend's other point that complaints can be used positively. The complaints made by victims and witnesses underline and are central to our concerns.

Mr. Edward Garnier: In view of the public pronouncements of the Director of Public Prosecutions, who is the head of the CPS, and those of the Attorney-General, the noble and learned Lord Williams, about the damaging effect of the Government's proposals on jury trial, to which tier of the complaints system will the Solicitor-General go? Is what the Government are doing part of a unified policy, or is their policy on the jury system all at sea?

The Solicitor-General: I am not sure that I understood what that question was about. Inasmuch as it was a question about what the DPP said—I have seen the transcript of his interview in The Times—my answer is that he did not condemn the Government's proposals. He gave a dispassionate account of the jury system in England and Wales. As the hon. and learned Gentleman knows, our changes have been introduced to improve the system, there will be an appeal mechanism, which we introduced as a result of consultation, and the higher judiciary support the changes.

CPS (Performance)

Mr. Owen Paterson: If he will make a statement on the current performance of the Crown Prosecution Service. [98867]

The Solicitor-General: During the year ending September 1999, the Crown Prosecution Service secured convictions in respect of 9,700—no, 9,000, or rather, that figure should be 972,518—defendants in magistrates courts, amounting to—[Interruption.] Let me continue. That means that 98.3 per cent. of defendants had their cases proceed to a hearing. Convictions were also secured in respect of a further 67,509 defendants in the Crown court, amounting to 88.5 per cent. of hearings.

Mr. Paterson: I am most grateful for that muddled answer. The Government propose to take away the British citizen's ancestral right to trial by jury, ostensibly in the name of efficiency and modernity. How much money will be saved for the Crown Prosecution Service?

The Solicitor-General: These changes are not being introduced primarily with financial considerations in mind. The figures that I read out were not muddled at all, but demonstrate that the CPS achieves a very high conviction rate: even among contested cases, 73.5 per cent. achieve convictions in magistrates courts. I remind

the hon. Gentleman of the changes that we have introduced since 1997 to join up the criminal justice system. Under the previous Government, the different agencies in the system operated separately. We are joining them up, and the system is operating more efficiently.

Mr. Dale Campbell-Savours: How are we to measure the performance of the Crown Prosecution Service in the treatment of the case of the so-called Lord Archer, who now stands accused of perverting the course of justice? Surely the CPS has a role in dealing with such matters. When will a statement be made?

The Solicitor-General: In every case, it is for the police to investigate matters. Once an investigation is made, the matter will come to the CPS which, of course, provides advice to the police if requested. I am sure that that is happening in the case to which my hon. Friend refers.

Mr. Ian Bruce: I was a little surprised that the Solicitor-General's comments on the performance of the CPS contained not a word about the speed at which the service is bringing people to trial. The Labour party election manifesto insisted that people would be brought to trial more quickly. Are young people being fast tracked by the CPS? How is the service performing under this Government?

The Solicitor-General: The hon. Gentleman refers to one of the Government's five key election pledges, on which we have achieved a great deal. Before this Government came to office, the national average for bringing persistent young offenders to trial was 142 days. That figure is coming down very substantially. We have said that we will reduce it to 71 days, but in some areas we have in fact achieved better than that.

CPS (North Yorkshire)

Mr. Lawrie Quinn: If he will make a statement regarding the developments in working relationships between the North Yorkshire police and the Crown Prosecution Service in Scarborough and Whitby. [98868]

The Solicitor-General: The CPS and the police in north Yorkshire continue to build on their excellent working relationships through the successful implementation of the Narey measures to reduce delay. They are currently working closely together in the planning for the implementation of the Glidewell criminal justice and trial units.

Mr. Quinn: Will my hon. and learned Friend say how effective the CPS has been in the Scarborough and Whitby area in delivering the Government's key manifesto pledge to reduce the time taken to bring persistent young offenders to trial? When I meet law enforcement officers in the area, I get the impression that we are doing better than merely delivering on that pledge. Is not that an example for the whole country?

The Solicitor-General: My hon. Friend is right. I just happen to have with me the figures for Scarborough, which show that the average time for bringing persistent


young offenders to trial there has fallen to 36 days. That is well below the target average of 71 days, and gives the lie to the point made by the hon. Member for South Dorset (Mr. Bruce) a few moments ago. I should add that the Scarborough office's record has been very good in that regard, and was used as an example for the Narey provisions.
I know that my hon. Friend has good relations with the CPS. His constituency office contacts the service from time to time, and he spent a long time with the service in the summer. He has a reputation as a hard-working local Member of Parliament, and his visit to the Scarborough office of the CPS was very much appreciated.

CPS (Public Interest Tests)

Mr. Norman Baker: If he will make a statement on the application of the tests of public interest by the Crown Prosecution Service in respect of minor crimes. [98870]

The Solicitor-General: The code for Crown prosecutors is issued by the Director of Public Prosecutions as required by section 10 of the Prosecution of Offences Act 1985. This public document sets out the fundamental principles to be applied by Crown prosecutors promoting fairness, consistency and independence.
The report of Sir Iain Glidewell expressed a concern that a literal reading of the code might incorrectly result in the public interest test being applied differently, depending on the seriousness of the case. Sir kin recommended that the code should be amended to prevent this misinterpretation. That recommendation has been accepted, and in August the Crown Prosecution Service issued to CPS staff a notice putting it into immediate effect.

Mr. Baker: I welcome that answer because there is a widespread belief in my constituency that so-called minor crimes are simply not carried through to prosecution. Vandalism, for example, may not be regarded as a serious crime, but it is a cause of intimidation and it underlines people's fear that other crimes are being committed, although that is not necessarily true. I understand that the police have not been passing on cases for prosecution because they believed that the CPS would not act on them. Does the Solicitor-General's answer mean that the CPS will now pursue prosecutions against minor crimes, which is what my constituents want?

The Solicitor-General: The CPS has always prosecuted minor offences. An ambiguity in the code might have led to a misconception that the service was not taking minor offences as seriously as the graver offences. However, the change in the code makes the position absolutely clear.
Many of the concerns are based on the broken windows theory that quite minor offences can be conducive to more serious offending. I know that the hon. Gentleman is concerned about minor offending in his constituency. He raised the matter of the number of recent offences in the Ringmer area recently. The chief Crown prosecutor for

the area has prepared a report on that which he has sent to me, and I shall write to the hon. Gentleman with its details.
The report shows that of the 79 cases reported between 1 July 1998 and 30 June 1999, 15 were detected by the police. Eleven defendants were given cautions, four cases were written off under Home Office rules, and only one came to the CPS. It is not that the service is downgrading cases or not investigating them; when cases come to the CPS, they are taken seriously. The one case out of the 79 that came to the CPS did not result in a prosecution, but I shall write to the hon. Gentleman about why that occurred.

CPS (Reform)

Mr. Ben Chapman: If he will make a statement on progress in the reform of the Crown Prosecution Service. [98872]

The Solicitor-General: We have made substantial progress in the reform of the CPS. As from April this year, CPS area boundaries now reflect those of police forces, encouraging closer liaison and co-ordination between the CPS and the police and enabling a better service to be provided to local communities. More work is being done and a major change programme is in progress, building on the Glidewell report and the new structures.
In the wider context, we are working to ensure that the criminal justice system really acts as a joined-up system. For the first time, we have an overarching single strategic plan and sets of joint aims and performance targets for the system in England and Wales. From April 2000, inter-agency strategy committees will address local performance issues.

Mr. Chapman: Will my hon. and learned Friend tell me more specifically about Sir lain Glidewell's recommendations on criminal justice units and on witness warning?

The Solicitor-General: We have accepted the recommendation about criminal justice units, and local areas are in the process of submitting plans. We decided that the police should retain their responsibility for witness warning, but, as I said to my hon. Friend the Member for Stafford (Mr. Kidney), witnesses and victims are now at the centre of our policy. Unfortunately, witnesses have not been taken seriously in the past and were pushed from pillar to post, but without witnesses we cannot conduct successful prosecutions, and we are now taking that point seriously.

Trial By Jury

Mr. John Burnett: What representations he has received on the statement made by the Director of Public Prosecutions on the right to trial by jury. [98873]

The Solicitor-General: I have received no representations on the matter. As I told the hon. and learned Member for Harborough (Mr. Garnier), I have read the article in The Times of 15 November and a


transcript of the interview. Neither the substance of the article nor the DPP's comments in interview justified the article's headline.

Mr. Burnett: In that article, the DPP expressed his grave concerns about the Government's proposal to curb trial by jury. In The Guardian today, the eminent Professor Bridges describes those proposals as likely to cause further delay and as deeply unfair. The Attorney-General and the Home Secretary both denounced those proposals three years ago. The Solicitor-General's constitutional role is to safeguard

the interests of justice. Will he therefore intervene with the Home Secretary to ensure that the proposals are abandoned? They are unlikely to save time or money, and they will deny justice to many of our fellow citizens.

The Solicitor-General: The proposed changes accord with the recommendations of the royal commission. The hon. Gentleman can produce one professor, but I can produce others, such as Professor Zander of the London School of Economics, who support the changes. The changes are justified and I support them.

Business of the House

Sir Patrick Cormack: Would the Leader of the House be kind enough to give us the business for next week?

The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): The business for next week will be as follows:
MONDAY 29 NOVEMBER—Second Reading of the Electronic Communications Bill.
TUESDAY 30 NOVEMBER—Second Reading of the Representation of the People Bill.
Motion on the Northern Ireland Appointed Day Order 1999.
WEDNESDAY 1 DECEMBER—Debate on the European Union on a motion for the Adjournment of the House in advance of the European Council meeting in Helsinki on 10 and 11 December.
THURSDAY 2 DECEMBER—Debate on the report of the royal commission on long-term care on a motion for the Adjournment of the House.
FRIDAY 3 DECEMBER—The House will not be sitting.
The provisional business for the following week will be as follows:
MONDAY 6 DECEMBER—Second Reading of the Government Resources and Accounts Bill.
TUESDAY 7 DECEMBER—Second Reading of the Freedom of Information ll.
WEDNESDAY 8 DECEMBER—Opposition Day [1st Allotted Day].
There will be a debate on an Opposition motion, for which the subject is to be announced.
That will be followed by a motion relating to the Postal Privilege (Suspension) Order 1999.
THURSDAY 9 DECEMBER—Debate on World Trade Organisation millennium round on a motion for the Adjournment of the House.
FRIDAY 10 DECEMBER—The House will not be sitting.
I am able to inform the House of business to be taken in Westminster Hall from 30 November. On Tuesdays and Wednesdays when the House is sitting and until the end of the Session, there will be Adjournment debates, the topics of which will be determined by ballot.
Additionally, on Thursdays until Christmas, the following topics will be subject for debate—
THURSDAY 2 DECEMBER—Sea Fishing—Eighth report from the Agriculture Committee Session, 1998–1999 HC 141; and Seventh Special Report (Government reply).
THURSDAY 9 DECEMBER—Debate on the Modernising Government White Paper.
THURSDAY 16 DECEMBER—Debate on delivery of nursery pledges and child care provision.
The subjects for debate on Select Committee reports have been set down by direction of the Chairman of Ways and Means in consultation with the Chairman of the Liaison Committee.
Finally, the House will wish to know that, subject to the progress of business, we propose that the House should rise for the Christmas recess at the end of business on Tuesday 21 December and return on Monday 10 January 2000.

Sir Patrick Cormack: I thank the right hon. Lady for giving us the business for next week and the provisional business for the week after. I also thank her for telling us the immediate future plans for Westminster Hall. Finally, I thank her on behalf of the staff of the House for announcing the dates of the Christmas recess, although I must express some disappointment on behalf of the staff that the Friday of the preceding week has not been given as the date for the rise of the House.
Can the Government indicate to us their thinking when we debate the royal commission on long-term care next week? My right hon. Friend the Member for north-west Hampshire (Sir G. Young) and I have pressed for such a debate for some months. Following that delay, it would be useful to know the Government's response to that royal commission, as well as hearing the views of the House.
May I also welcome the debate on Thursday 9 December on the World Trade Organisation millennium round? As the right hon. Lady will know, we have much sympathy with the Jubilee 2000 campaign. Perhaps, again, we can have a definitive statement of the Government's position during that debate.
May I ask for an absolute assurance that the Standing Committee and remaining stages of the Representation of the People Bill will be taken on the Floor of the House? This is a constitutional Bill of far-reaching importance. When electoral reform measures were put before the House in 1984 and 1989, they were taken on the Floor of the House, as was a much less significant measure in 1983, for which there was also a joint Select Committee of both Houses. Therefore, we expect this Bill to be taken on the Floor of the House.
Will the right hon. Lady give us some sign of when we will have the autumn expenditure debate for which my right hon. Friend the Member for north-west Hampshire also asked last week? Will she also tell us when we will have the two-day defence debate, which the House has been denied for a long time and which we would expect?
Will the right hon. Lady also promise that on Monday the Prime Minister will give a statement to the House on the summit that is taking place in Downing street? Also, in view of the confusing and ambivalent reports in today's papers, will she give an absolutely clear undertaking on where the Government stand on the beef ban? Perhaps the right hon. Gentleman could also explain why he has not given Mr. Jospin some excellent British beef for lunch. As the right hon. Lady knows, many people find it utterly incomprehensible that we still have a ban on beef on the bone and. as Christmas is approaching and beef is a traditional Christmas dish, will she give an assurance that the Minister of Agriculture, Fisheries and Food, who is not a million miles away from her at this moment, will make it clear to the House beyond doubt that we can have beef on the bone for Christmas?
Finally, the right hon. Lady was good enough to tell us the dates for the Christmas recess and we appreciate that. As she will know, the Modernisation Committee, of which she is Chairman, called for a much more structured


parliamentary year and talked about a constituency week in February. Will she promise to announce before Christmas the remaining dates of this parliamentary year?

Mrs. Beckett: I hope that I will not forget any of that. First, I am grateful to the hon. Gentleman for his welcome for the dates of the Christmas recess. To pick up on his final point, I fear, however, that we have done well to give both the dates of rising and of the return of the House and I am certainly not in a position to give any other dates at this point in the year. While it is highly desirable to have a more structured parliamentary year, and I would like to be able to give firmer dates for the year ahead, that depends—as it is bound to do—on the progress of business. The hon. Gentleman will know that, from time to time, business does not progress as smoothly as we would all wish. The recommendations of the Modernisation Committee, as far as I recall—although I was not then a member of it—were predicated on matters such as programme motions, which might be voluntarily agreed to enable more structured discussion. While we lack more structured discussion, we cannot have a more structured timetable.
The hon. Gentleman also asked about the debates on long-term care. If he casts his mind back, he will recall that the pressure for a debate on the royal commission report has always been so that the House could have a chance to express its view and people could air the ideas floated in that report. He is now asking me for a clear indication of Government policy. We undertook to structure a debate so that the House could have a chance to air the issues and give its views and that is the debate that is being provided.
The hon. Gentleman also asked whether we would use the WTO debate to give a commitment and undertaking about the progress sought by Jubilee 2000. He will know that that is not quite the same as the WTO discussions on a whole new trade round. Indeed, it is not possible to judge that at present, because the Seattle talks have not yet begun. However, I should be surprised if there is not sufficient material in those talks to take up the time for the debate, without being able to go into the issues on Jubilee 2000. The hon. Gentleman knows that the Government have been working on those issues, but I do not anticipate they will necessarily be covered during that debate.
The hon. Gentleman asked me for an absolute assurance that the whole Committee and Report stages of the Representation of the People Bill would be taken on the Floor of the House. All I can say is that I am prepared to consider that matter and to discuss it. I am a little sceptical about the readiness with which the Opposition identify what they think are constitutional issues—especially the notion that that entire Bill should be taken on the Floor of the House. I am prepared to discuss the matter, but I am certainly not prepared to give such a commitment at present.
The hon. Gentleman will be aware that we continue to discuss the handling and the timing of the public expenditure debates, and I assure him that we are looking anxiously for an outcome to those discussions.
The hon. Gentleman said that the House had been denied the debate on the defence report. That is a little unfair. We made it plain that the defence White Paper

would need substantial rewriting and updating, following defence developments during the year—especially over the summer—but that we would present it to the House as soon as we could, and that we anticipated holding a debate on it as soon as possible, given that we should need to take into account the report of the Select Committee on Defence on the matter before we put it to the House.
The hon. Gentleman asked for a statement on the Anglo-French summit. As he will be aware, the precedent is that the Prime Minister comes to the House to make a statement after formal European summits. There is no precedent for a demand for a statement after every informal summit—indeed, that would hardly be practical.
The hon. Gentleman asked me a string of questions about beef. I say simply that, of course, those are issues of importance and concern—the whole House realises that. However, in calling for them to be aired so thoroughly immediately after Agriculture questions, perhaps his timing was a little off.

Mr. Paul Flynn: Will my right hon. Friend give serious consideration to a debate on early-day motion 1?
[That this House welcomes the Government's decision to raise income support for pensioners annually in line with average earnings, but regrets the widening gap between the basic pension and income support; notes the Treasury's estimate that by April 2002 the National Insurance Fund's balance will be £8.43 billion above the minimum recommended by the Government Actuary; and urges that part of that surplus should be used to restore the link between the basic pension and average earnings for the remaining years of this Parliament, thus ensuring that all pensioners share in the nation's increasing prosperity and preventing a further increase in the number receiving income support.]
Yesterday, 1,000 pensioners came to Parliament to campaign and to lobby the House for the restoration of the link between average earnings and the basic pension. Pensioners, rightly, feel insulted by this year's award of 75p. They correctly point out that the basic pension is not welfare—not a gift from a generous Government—but an entitlement for which they have paid throughout their working lives. They feel rightly contemptuous of some of the Government's other attempts to give them money in the form of a demeaning handout. [Interruption.]
The pensioners came here yesterday in great numbers, but I have not seen a syllable of report about their demonstration in this morning's newspapers. This morning, one of them asked me, "Must we behave as certain other groups do, and demonstrate more violently before the Government hear our just demand?" There is a surplus of £8 billion in the national insurance fund; there was £3 billion when we came into office and £5.9 billion last year. In 2002, there will still be £8 billion. The money is there. Why do not we honour the promise that we have made to the pensioners over the past 20 years to restore the link?

Mrs. Beckett: With respect to my hon. Friend, that was not the promise that we made over the past 20 years. Of course, I understand that pensioners are dismayed. He will realize—as perhaps they are, perfectly understandably, less willing to do—that the scale of the proposed increase is linked to the rate of inflation. It is a consequence of the


low rate of inflation that that figure translates into about 75p. He talks—[Interruption.] Opposition Members are muttering about grinding the pensioners down. When my hon. Friend referred to pensioners' entitlement and said that pensioners regarded the award as contemptuous, Opposition Members cheered. I want to hear no more on that matter from Opposition Members. The Conservatives broke the link between pensions and earnings and took many other steps to erode the income of pensioners. It was a Mr. Michael Portillo—when he was a Member of this House—who said that the policy of the Conservative party would, over time, render the basic state pension nugatory. In consequence, he recommended that people should make private pension provision. The Government are starting to repair the damage done by the Conservative party, and Conservative Members have no right whatever to say anything, except to apologise.
I simply say to my hon. Friend that I do, of course, understand to the full pensioners' concern that they have paid their contributions and that they feel entitled to a decent pension, but he knows that the scheme is not funded—it is a pay-as-you-go scheme—and that the Government of the day have to find the resources.
The Government have chosen to give priority to the oldest pensioners, who, as my hon. Friend knows, are, for a variety of reasons, the poorest. We are doing as much as we can to help all pensioners, but giving priority to those who are least well off. I doubt that my hon. Friend will disapprove of that, although I know that he will continue to campaign for a greater increase for pensioners.

Mr. Paul Tyler: My colleagues and I warmly endorse the sentiments expressed from the Labour Back Benches by the hon. Member for Newport, West (Mr. Flynn). We expressed very similar concerns in yesterday's debate on the economy. I hope that the Leader of the House will recognise that there is a real problem for a Government who seem to be listening to the tax cutters of middle England, not to those who are disadvantaged.
On the Representation of the People Bill, will the Leader of the House please give us a firm assurance that all parties will be involved in discussions about the proper way to handle it? I endorse her very proper reluctance to fall for the idea that the Floor of the House is the right place to deal with detailed constitutional matters. All too often in the past two years, we have seen that that is not always the best way to handle the details. Will she pay special attention to the recommendation of the Modernisation Committee that it may sometimes be appropriate to split matters of principle, which should be dealt with on the Floor of the House, from matters of detail, which should be dealt with in Committee upstairs?
May we have an early statement on the Government's detailed proposals for political donations? Instead of finding loopholes for tax exile millionaires, will the right hon. Lady carefully consider the recommendations of the Neill committee to help those on more modest means to make modest contributions to political parties by means of tax concessions? Will she read the remarks of Lord Neill of Bladen, chairman of that committee, in the debate on the Loyal Address in the other place yesterday, at column 480? He urgently, and very properly, encouraged the Government to take up his committee's proposal.

Mrs. Beckett: Of course I understand that the hon. Gentleman's party endorses the concerns of my hon.

Friend the Member for Newport, West (Mr. Flynn). I hope that I am not being too unkind when I say that the hon. Gentleman knows that the Liberal Democrat party has a problem, in that it is always prepared to encourage more spending on everything without knowing where the money is to come from. However, I accept that there are issues of concern, which will always continue to be discussed.
The hon. Gentleman asked that everyone should be involved in discussions about the handling of the Representation of the People Bill; I am happy to give that assurance. I entirely take his point that, with regard to such matters, often it is better for discussion of detail to be separated from discussion of principle. However, these are all issues that we can consider.
The hon. Gentleman asked for detailed proposals about political donations. I am afraid that I do not have in my head the details of the timing of an announcement on that matter, but obviously it comes up in the context of the legislation that we shall discuss during this Session.
I am aware that the Neill committee made the recommendation that the hon. Gentleman mentioned, and that Lord Neill expressed disappointment that the Government did not follow it. Lord Neill is a man of high reputation and standing, justly earned, but it is fairly common for those who chair such committees to be disappointed unless every dot and comma of everything that they recommend is accepted. I fear that the Government are not persuaded of the case for tax relief on donations to political parties.

Mr. Dale Campbell-Savours: My right hon. Friend may have noticed that, during Agriculture questions, several Conservative Members objected to British beef sold in France being labelled as British. They are obviously ashamed of British beef, whereas we stand up to protect it. In the light of their interventions, and so that they may again put their case to the House—because I am sure that the country will want to hear of their feelings—may we have a debate on labelling? It is an important issue. When beef is sold in France, a label saying "Produced in Britain" will help to secure a share of that market again.

Mrs. Beckett: My hon. Friend makes an interesting point. I share his view that, given the steps that, tragically, had to be taken in the aftermath of the dreadful BSE crisis, British beef is probably now the safest in the world. We should argue that something that is labelled "British beef' offers a greater guarantee of quality than can possibly be said of beef from any other origin. Over time, it will be possible for us to make and sustain that case. However, I fear that I cannot offer time for a special debate on labelling, although I understand—

Mr. Campbell-Savours: I will try again next week.

Mrs. Beckett: I am sure that my hon. Friend will try again next week.

Mr. John Wilkinson: Following Prime Minister Putin's statement yesterday to the Duma of the Russian Federation that the rise in the price of oil will permit the Russians to prosecute the war in Chechnya ad infinitum, will the Leader of the House ask her


colleague the Foreign Secretary to come to the House to make an emergency statement about Her Majesty's Government's attitude to the humanitarian catastrophe that is occurring in Chechnya without any let or hindrance on the part of the west? Will the Government explain whether they are happy to allow credits to be disbursed to Russia in circumstances in which hundreds and thousands of people are being massacred and driven from their homes, or whether they will do the right thing and cut off credits to Russia?

Mrs. Beckett: The hon. Gentleman makes a point as well as asking for a statement from the Foreign Secretary. As I am sure that he is aware, the Government have engaged in discussions with the Russian Government about the handling of affairs in Chechnya and we have sought continually to find the right and the best way to exert the influence that the whole House would wish to see exerted. International pressure got an agreement to a humanitarian role for international organisations and, at the recent summit, it brought the Russians to accept that a political solution was needed.
On the suggestion about the need for an emergency debate, I remind the hon. Gentleman that we have just had a foreign affairs debate in the debates on the Queen's Speech and that Foreign Office questions will be held on 7 December. Opportunities will arise to discuss the subject without an emergency debate.

Mr. John Cryer: Can my right hon. Friend confirm that the constitutional Bill, which will come to the Floor of the House next week, will contain changes to the law on the funding of political parties? The House desperately needs a debate on the funding of political parties and the country would like to see such a debate, so that relevant questions can be asked about the scandalous state of funding of the Conservative party and so that the stories can be exposed for what they are. Instead, the leadership of the Tory party is currently producing smears and smokescreens in an attempt to divert attention away from itself.

Mrs. Beckett: I have read some most extraordinary stories in the aftermath of what is obviously deep Conservative embarrassment about what has emerged about Mr. Ashcroft. I speak from memory, but I think that issues of funding do not arise in that Bill, but they will arise in a later Bill on the funding of political parties. However, I can assure my hon. Friend that, in this Session, there will be legislation that focuses on this issue. It is a matter that the House needs to resolve.

Mr. Patrick Nicholls: Will the Leader of the House reconsider the response that she gave to the hon. Member for Newport, West (Mr. Flynn)? Would not the debate that the hon. Gentleman has in mind give us the opportunity to remind ourselves that the Conservative Opposition campaigned in 1979 to break the earnings link that the then Labour Government had introduced? In two out of the three years in which the link would have applied, the Labour Government refused to implement their own legislation. When the late David Ennals was asked why he had not done the calculation correctly, he said that he was required to do it but that he was not

required to get it right. Would not such a debate give us the opportunity to realise that the blatant cynicism of new Labour is every bit as bad as the blatant cynicism of old Labour?

Mrs. Beckett: I can only say to the hon. Gentleman that he clearly knows nothing whatsoever about his Government's track record on pensions policy, or he would not in a million years ask for a debate on it. I can think of nothing that I would enjoy more than to take part in such a debate and to repeat to Conservative Members precisely what they did in government. Their behaviour was disgusting, and they have never apologised for it.

Helen Jackson: Is the Leader of the House aware that next week is the international violence against women week? She will be aware that, unfortunately, in areas around the world where there is war, some of the most appalling acts involve violence against women, but also here at home, the percentage of crimes of violence that are categorised as domestic violence is on the increase. Will she find time for that issue to be debated in the Commons next week?

Mrs. Beckett: My hon. Friend is entirely right to draw attention to that important event, and I am aware of the international week and the importance of the issue. She will know that there are a number of associated conferences and events, some of which have been arranged by local organisations and others by the Government. She will know also of the targeted funding being made available from the crime reduction programme for projects that target domestic violence here at home. I fear, however, that although I recognise that much work is being undertaken elsewhere, I cannot undertake to find time for an extra debate in the House.

Mr. Peter Luff: Obviously I am delighted that the Agriculture Committee will write a small footnote in parliamentary history when, next week, its report will become the first Select Committee report to be debated in Westminster Hall. Does the Leader of the House understand, however, that until she made her statement, we understood that the debate would take place in the following week? There seems to have been rather a worrying lack of consultation with the Select Committee about the date for that debate. I know that we are all finding our way on how Westminster Hall works, but may I urge her in future to make sure that the dates, as well as the subjects, for those debates are discussed with the relevant Select Committee staff and Chairmen?

Mrs. Beckett: May I say at once to the hon. Gentleman that I apologise that that was not the case. Certainly he is absolutely right to make his point. One of the reasons for giving the progress of business about a month ahead is so that, through the mechanism of the Liaison Committee and the Chairman of Ways and Means, we can try to make sure not only that the right debates are sought, but that they do not conflict with the concerns of the Select Committees. I am sorry if, for some reason, that did not happen on this occasion. As the hon. Gentleman says, next week will see the first debate in Westminster Hall, and we shall hope to do better in future.

Mr. Paul Truswell: Will my right hon. Friend arrange for an early statement to be made about


plans to tackle the enormous amount of pollution caused by combined sewer overflows throughout the country? Is she aware that there are thousands of those structures and during heavy rainfall they discharge untreated effluent and sewage into watercourses such as the picturesque Tyersal beck in my constituency? Does she agree that the House and the public require early assurance that plans are in hand to deal with that major environmental and health hazard?

Mrs. Beckett: I am aware that there are such problems, although I was not aware of the particular problem in my hon. Friend's constituency, and I am sorry to learn that it affects his constituents. There are areas of my constituency where such problems occur from time to time, and I am sure that he recognises, as I do, that they are a consequence of the backlog of work that had not been undertaken and which still needs to be addressed. I certainly recognise the concern, and I think that everyone realises that it is a problem that we shall have to tackle, but obviously the scale of the problem is such that it can only be tackled over time. I fear, however, that I cannot undertake to find time for a special debate on that matter in the near future because, as he will recognise, the pressure of business is considerable.

Mr. Desmond Swayne: The right hon. Lady has been good enough to tell the House the date on which we shall rise for Christmas. Is she aware, however, that on 23 September, her right hon. Friend the Minister of Agriculture told David Dimbleby, regarding the beef on the bone ban:
I hope we can get the ban lifted, at least in England, before Christmas"?
Given that we did not reach Question 12 on the Order Paper today, we may have denied the right hon. Gentleman the opportunity to make an important statement. Will the right hon. Lady assure us that he will be given that opportunity before Christmas?

Mrs. Beckett: I think that the hon. Gentleman is perhaps asking for an extension of the sitting of the House until closer to Christmas. He may find that that is not universally popular with his colleagues. I am sorry that the House did not get to his question—as I presume that it was—but I am sure that my right hon. Friend is most anxious to give the House news on that matter when he can.

Mr. Paul Marsden: Could my right hon. Friend find time for a debate on local democracy and elected mayors? The Government have given back democracy to the people of London by setting up the Greater London Authority, in stark contrast to the Conservatives, whose candidate for the post of mayor was recently described as one of "probity and integrity" by the Leader of the Opposition and whose book "The Eleventh Commandment" seems to refer to that well known edict "Thou shall not tell the truth to your party leader when asked whether thou hast any sleazy skeletons in thy own closet."

Mrs. Beckett: My hon. Friend is entirely right about the importance of restoring Londonwide government. I am sure that he, like me, recalls vividly the time not so long ago when separate London boroughs made separate

decisions about the closure of their bridges over the river, which resulted in considerable traffic chaos for London. Our measure is certainly long overdue. As to the further issue that my hon. Friend raises about the former Tory candidate for mayor, the House recognizes—although I understand that not everybody wants to admit it—that yet again it casts an unfortunate light on the judgment of the Leader of the Opposition.

Mr. Christopher Gill: May I draw the attention of the Leader of the House to early-day motion 62?
[That this House notes with interest Germany's recent demand for country of origin labelling for meat; and urges Her Majesty's Government to open urgent negotiations with other EU countries to bring about a change in the treaties so as to make country of origin labelling mandatory throughout the Community.]
The motion calls for mandatory country of origin labelling. The Leader of the House has already said that she is not prepared to give us a debate on the subject, but will she assure us that she will take up the issue with the partner nations in the European Union with a view to reviewing and amending the treaties so that country of origin labelling is made mandatory? That would be very helpful in making Governments come up with meaningful and clear labelling, which would in turn be helpful to the consumer. The right hon. Lady will also be mindful of the beneficial effect that it would have on the producers of livestock in this country, who are currently suffering from the fact that their product is not easily distinguishable from imported products.

Mrs. Beckett: I cannot undertake to ensure mandatory labelling in the near future, but I can certainly assure the hon. Gentleman that the Government are committed to the underlying aim of his proposal, which is well informed choice and clear and unambiguous labelling. We are doing everything that we can nationally to clamp down on labelling and internationally to promote the cause of clear, unambiguous labelling across the board. We shall continue to work to that end.

Mr. Huw Edwards: May I draw my right hon. Friend's attention to early-day motion 87?
[That this House deplores the unacceptable level of violence against women, and believes that a thorough review of civil and criminal law is needed to ensure that violent men are prevented from tracing their former partners and then assaulting and killing them; believes that this should include a strengthening of police powers and court sanctions when injunctions are broken, and that there should be a robust policy of arrest and prosecution under the criminal law, an end to the routine bailing of men for breach of the peace and an end to the downgrading of charges through plea bargaining; supports the implementation of domestic violence awareness training for all those working within the justice system, including family law solicitors and the judiciary; recognises the need to restrict access by violent partners to information about the location of women through court proceedings and the provisions of the Children Act 1989; and accepts that men who abuse women forgo their right to access.]
I should like to follow my hon. Friend the Member for Sheffield, Hillsborough (Helen Jackson) in asking for a debate on domestic violence. The motion has been signed


by 158 Members of Parliament from all parties who deplore the unacceptable level of violence against women and call for a thorough review of the civil and criminal law on the subject. Will my right hon. Friend join me in congratulating Abergavenny women's aid, which moved to new premises this week, and Monmouthshire county council on the support that it gives to that organisation?

Mrs. Beckett: I am happy to join my hon. Friend in welcoming the excellent work done by Abergavenny women's aid and the support given by Monmouthshire county council. He will know that there are many good local initiatives across the country and much good work is being done. He will also know that the Government published a report in the summer called "Living Without Fear", drawing together the initiatives across government that are promoting action against violence against women, including the allocation of money from the crime reduction programme. I assure him that we shall continue to work to that end. However, as I said to my hon. Friend the Member for Hillsborough, I fear that I cannot find time for another early debate.

Mr. David Chidgey: May I draw to the Leader of the House's attention the fact that in July 1997 the Foreign Secretary told the House that the Government
are committed to preventing British companies from manufacturing, selling or procuring equipment designed primarily for torture".—[Official Report, 28 July 1997; Vol. 299, c. 65.]
She may not be aware that such equipment includes leg irons and shackles that can be bought in America, having been manufactured in Britain by a company in Birmingham that owes its origins to its association with the slave trade. Such instruments can be bought freely over the counter on request. It appears that that is because it is still legal to manufacture such instruments of torture in this country provided that they are exported and sold as components. If they are later assembled by putting the chains to the leg cuffs, they can be sold as instruments of torture. Will she talk to her colleague, find time in this House to close this legislative loophole and stop this appalling trade?

Mrs. Beckett: The hon. Gentleman is correct that I am not aware of the issue, and nor, I would imagine, is my right hon. Friend the Foreign Secretary. I fear that I cannot undertake to find time for a special debate, but I will draw his remarks to the attention of my right hon. and hon. Friends, who will certainly share his concern.

Mr. Graham Brady: May we have an early statement on the newly published school performance tables to show the unfortunate state of affairs whereby 50 schools see 20 per cent. of their pupils leave with no qualifications? That would provide an important opportunity for the School Standards Minister to explain to the House why it was necessary for the Government to attack some of our most successful schools, particularly the grant-maintained schools, which have done such a good job. Schools such as Blessed Thomas Holford and New Wellington, which are grant-maintained high schools, not grammar schools, achieve results of the order of 40 and 43 per cent. of children getting and five or more grade A to C GCSEs. Those are outstanding results from

grant-maintained schools that flourished under the previous Government but are now threatened by this Government.

Mrs. Beckett: Everyone in the House wants excellence and high standards in education, but the notion that that is threatened in grant-maintained or any other schools is ludicrous. The Government are improving the position and improving funding for all schools. While it is important that the funding is well directed, because there is no automatic correlation between more money and higher standards, the Government are determined to ensure that it feeds through to higher standards.

Mr. Owen Paterson: The Government have imposed huge increases in fuel duty so that 85p in every pound spent on fuel is tax. We have easily the highest fuel costs in western Europe. The Government have got away with it partly because the world oil barrel price has been as low as $10. Now oil is nudging $27 a barrel, and the increases cannot be hidden. It looks as though we will celebrate the millennium in Shropshire with a £3.50 gallon of fuel. Two thirds of people in Shropshire drive to work in a car. This is a huge taxation increase on lower paid people and the strategic road haulage industry is being affected. Can we have a debate next week?

Mrs. Beckett: No, I am afraid not. The hon. Gentleman knows that the matter has been extensively discussed in the House and outside. He was careful to say that the fuel duty increase was all down to this Government. The Opposition are already determined to forget that the fuel duty escalator was introduced by the Government that the hon. Gentleman supported. He and people outside the House know that the Chancellor has heeded some of the concerns that have been expressed. That was reflected in the proposals that he advertised in his pre-Budget statement. He dealt with one of the main concerns of those worried about fuel duty when he said that any increases above real terms would in future go into funds linked to transport provision.

Mr. Andrew Stunell: Will the Leader of the House arrange an early debate on the housing benefit system, and in particular the damage that is being done to its principles by the activities of the rent officer service? Is she aware that in my area, Stockport, some 3,000 tenants face redetermination of their standard reference rent leading to drops of £20 a week in the support available to them? Does she realise the tremendous difficulties that that is causing?

Mrs. Beckett: All hon. Members are aware through their constituency case load of the impact of the rent officers. However, I was not aware of the concentrated problem that has arisen in the hon. Gentleman's area. He will know that the Government intend to publish a housing Green Paper in due course, which will examine the housing benefit system. I fear that I cannot undertake to find time for a special debate on the matter, but I shall draw his remarks to the attention of my right hon. and hon. Friends, as they concern the sort of issue that they will want to consider in their discussions on that Green Paper.

Mr. Shaun Woodward: The Leader of the House will be aware of the concern that is building up


around the country about the Government's programme of closing community hospitals. She may not be aware that her right hon. Friend the Secretary of State for Health, with his former colleague, the right hon. Member for Holborn and St. Pancras (Mr. Dobson), sat on the decision on hospitals in Oxfordshire for 18 months, including proposals to close two community hospitals. Today, the Secretary of State has had the courage to announce that the Government are continuing with their closure programme, and that two more community hospitals will be closing at Burford and Watlington in Oxfordshire. That is at a time when the Deputy Prime Minister wants to expand the number of households in Oxfordshire. Will the Leader of the House find time for an urgent debate on the closure of those two hospitals in Oxfordshire, and how that policy can be reconciled with the Deputy Prime Minister's proposals to increase the number of people who will need those services in the county?

Mrs. Beckett: I am afraid that I cannot promise to find time for a special debate, but I shall draw the hon. Gentleman's remarks to the attention of my right hon. Friends the Secretaries of State for Health and for the Environment, Transport and the Regions, especially about the link that he discerns between different policies. There is always concern about proposed changes or closures of hospital facilities and provision, but if we were to follow the policy advocated by the Conservative party's health spokesman, health service hospitals, other than those that deal with the most acute and urgent cases, would disappear altogether.

Mr. James Clappison: I have two requests. First, could time be found for a debate on police numbers, which is a source of great anxiety to my constituents given that the number of police officers serving Hertsmere has fallen by more than 20 per cent. since 1997? Secondly, has the right hon. Lady given any thought to subjecting the Freedom of Information Bill to the Special Standing Committee procedure, of which she and the Home Secretary have a high opinion? Would not that Bill be an obvious candidate for that procedure, so that it could receive more detailed scrutiny? Presumably, on freedom of information, the Government have nothing to hide.

Mrs. Beckett: The hon. Gentleman is not one of our regular contributors at business questions. It is usual to ask one question, not two. However, I shall deal with both his requests. He asked me to appoint a Special Standing Committee on the Freedom of Information Bill. It is important that the Conservative party does not forget that that legislation has already been through a special Committee procedure and has had special pre-legislative scrutiny. It has already had the scrutiny he seeks, so his point about the Government having something to conceal is nonsense.
The hon. Gentleman asked about police numbers. I am sorry to learn that there is concern about the level of police provision in his area, but the Conservative Government took the control of numbers out of the hands of Ministers and placed it in the hands of police authorities, although I recognise that that is influenced by other decisions. The only Government in recent years who

have provided ring-fenced funding for extra police officers is the present Government, as the Home Secretary made clear at the party conference.

Mr. Nigel Evans: The Leader of the House said that the Government wanted excellence in education. Will she arrange for a specific debate on the future of grammar schools? It would give Labour Members with grammar schools in their constituencies the opportunity to state whether they would back or sack those schools. There is a school places crisis in my constituency. Labour-controlled Lancashire county council has said that parents will have to bus their children miles out of the area to a neighbouring school to which they would prefer their children did not go. Clitheroe Royal grammar school, which is a beacon school and which the Minister for School Standards, who is sitting beside the right hon. Lady, has stated is an excellent school, is prepared to take an 30 extra youngsters, but the Labour-controlled county council has said that it will be allowed to provide only five extra places. The council does not want to be seen to be promoting grammar schools in the county.

Mrs. Beckett: I fear that I cannot find time for a debate on what is, in fact, a long-running saga rather than a new issue. One of the hon. Gentleman's colleagues recently secured an Adjournment debate on grammar schools, which, unfortunately, the hon. Gentleman did not manage to attend.
The Government are determined to promote excellence in education across the board, but I would be unwilling to promote a debate that automatically linked excellence in education with the existence of grammar schools. There are many excellent schools of various kinds, and in the past, in particular, some schools that have been called grammar schools could not be described as excellent by any standards. I know that, because I was at one.

Mr. John Bercow: Will the Leader of the House reconsider her dismissive response to my hon. Friend the Member for North Shropshire (Mr. Paterson), and arrange, as a matter of urgency, a full day's debate on extortionate petrol prices? That would meet the concerns of my distinguished 81-year-old constituent Mrs. Elizabeth Zettl, of High street, Buckingham, who at the time of the Budget debate was so angry about the Chancellor's policies that she urged me to roll up my speech and throw it at the Government Front Bench—an action that I was prevented from taking only by my natural regard for parliamentary etiquette and my respect for the Chair.

Mrs. Beckett: Let me say to the hon. Gentleman, and to his hon. Friend the Member for North Shropshire (Mr. Paterson), that it is good to see normal service being resumed.
We have already aired the issue of petrol prices. I am sorry to learn of the hon. Gentleman's constituent's concern, but I fear that this tends to happen. My own mother used to scream at the television when listening to the views of Conservative party spokesmen during the last Parliament.

Local Government Finance

The Minister for Local Government and the Regions (Ms Hilary Armstrong): With permission, I should like to make a statement about local authority revenue finance for England in 2000–01.
Local councils throughout the country deliver services that strengthen our communities and are vital to our future economic success. As my right hon. Friend the Chancellor of the Exchequer explained to the House in his pre-Budget statement, the Government's reforms are creating a stable economy and sustainable public finances. That means that we can invest for the future, combining enterprise and fairness. This Government invest for a purpose, to secure better delivery of services. We are investing in nursery provision—there will be 48,000 new nursery places for three-year-olds by next March—and in schools, setting rigorous targets for higher standards in literacy and numeracy. By next April, local authorities will have a new grant of £140 million over the ensuing three years to enable carers to take a break.
That action to secure a platform of economic stability and steady growth has enabled us to give local government a measure of stability that is widely welcomed, and the stability that we have created will enable local government to focus its efforts on delivering better services. While ensuring that local councils receive the funding that they need in order to deliver high-quality local services, the Government are modernising the way in which councils are managed to ensure that local people obtain a better deal. We will shortly publish a local government Bill that will pave the way for people to play a bigger part in shaping their local communities.
The July 1998 comprehensive spending review White Paper set out the spending totals for next year, and the details of revenue funding that I am announcing today confirm those totals with minor adjustments. The comprehensive spending review provides local government with the additional resources needed to deliver better services to local people.
My right hon Friend the Secretary of State for Education and Employment is announcing today the provision of an extra £64 million for education spending—[HON. MEMBERS: "Where is he?"] My right hon. Friend is here today. I am making this announcement, and other announcements will be made in the usual way. The additional £64 million for education spending that my right hon. Friend is announcing brings the total additional revenue provision for education next year to £1.8 billion. He is also announcing that we will reschedule the introduction of increased employer contributions to teachers' pensions, which will ease the pressure on school budgets next year by a further £90 million.

Mr. Eric Forth: On a point of order, Madam Speaker.

Madam Speaker: The right hon. Gentleman has been in the House a long time and should know that points of order are traditionally taken after Question Time and statements.

Ms Armstrong: These announcements reflect the top priority that the Government continue to give to ensuring that schools have the funds that they need.
The comprehensive spending review gives three years of substantial growth in Government funding for local authorities. It was, and remains, the best settlement for local government since the introduction of the council tax.
We have not only provided significant increases in funding, we have also given local authorities the opportunity to undertake sensible forward planning in a way that was not possible in the past. Local authorities can now broadly predict the grant that they will get from Government, because we do not propose to make changes to the grant distribution formulae over the comprehensive spending review period. Local government has welcomed that greater certainty about future funding levels, and I am sure that the House will endorse that view.
Support from Government grant and business rates will be £41.76 billion next year, an increase of £2.2 billion or 5.5 per cent. That increase is more than twice the underlying rate of inflation. I propose that the revenue support grant should be £19.44 billion, subject to any slight alterations following the consultation that I am launching today, and which runs until 6 January 2000. In addition, some £6.92 billion of specific and special grants will be available to councils. Next year, we will redistribute £15.4 billion of business rates to local authorities and I am publishing the basis for the distribution today.
Hon. Members will be aware that the next revaluation for the purpose of non-domestic rates will take effect from 1 April 2000. I am announcing today the details of the transitional relief scheme to phase in changes in non-domestic rate bills as a result of the revaluation. I am pleased to say that there will be limits on the size of annual increases in rate bills over all five years of the new rating list.
In order to give added protection to small businesses, I shall give additional protection to small properties. That will be offset by limits on the amount by which bills can decrease, which will also be more favourable to enterprises operating from smaller properties. Nearly half of all small properties will see their rate bills fall next year and none will see an increase of more than 5 per cent. in real terms.
Revaluation does not mean that more money will be raised from the rates over the next five years. We propose to reduce the national non-domestic rate multiplier of 41.6p in the pound in 2000–01 to take account of the increase in rateable value across the country. That compares with 48.9p in 1999–2000. The revaluation will ensure that the burden is spread fairly between ratepayers, in line with changes in the property market since the last revaluation.
Following the revaluation, the Government will review the current system. That will not be a fundamental review of the business rate, but it will look for ways of improving the approach to valuation in order to increase stability, certainty and simplicity in the system. We will consider changes to the frequency of valuations. Details of the review will be announced in due course.
Increases in council tax are a matter for individual local authorities to decide. However, before they do so, we expect them to consider how they could be more efficient and effective. They should consider the fact that we have provided substantial increases in grant for most councils and should exercise restraint. In 1999, many councils clearly thought much harder about the increase that was


really needed and what local people would be prepared to pay. The average council tax increase came down from 8.6 per cent. to 6.8 per cent., and we did not have to use our capping powers last year. We want all councils to think in that way in future. However, we are willing and able to act to prevent excessive council tax increases.
I have already announced that we shall continue the scheme for limiting the benefit subsidy that central Government pay when council tax increases are above a guideline. The guideline for the 2000–01 scheme will be the same as last year: a 4.5 per cent. increase in council tax or the higher increase that is necessary to give the council a budget requirement increase that is equal to its full cash standard spending assessment increase. As suggested last year, the scheme will operate cumulatively. We will use the previous year's council tax of every authority at guideline as the starting point. Today, I am issuing full details and an explanatory note about the scheme for 2000–01.
As we explained in our July 1998 White Paper on local government, we propose to keep the method of grant distribution stable while we consider whether we can devise a system that is more effective in putting money where it is most needed and will do most good. In keeping with that policy, and as I have already explained to the House, I propose to make no new changes this year to the general method of grant distribution.
Although the method of calculation will not change, some of the SSAs to be used next year will change because of the new local government structure in London. There will be two main changes. First, some functions, such as maintenance of specific roads, will transfer from London boroughs to the Greater London Authority; we shall need to transfer SSAs to reflect that. Secondly, the boundaries of the Metropolitan police district will be reduced to cover only the Greater London area, and the police authority areas of Surrey, Hertfordshire and Essex will increase. Again, SSAs will need to be adjusted.
We cannot ignore data changes, such as changes in resident population, as those inevitably mean that some authorities do better than others. However, the effects of data changes are less than the effect of changes that would have resulted from adjustments to the grant distribution formulae. We have also given local authorities as much advance notice of data changes as we can, releasing the figures as they became available.
I also propose similar arrangements to last year's for phasing in grant changes. That means that no authority will receive less central support from the Government in 2000–01 than in 1999–2000, and that every education authority will receive at least a 1.5 per cent. increase in central support. Those comparisons will make allowance for changes connected with the creation of the Greater London Authority.
Today, my Department is writing with details of the settlement to every local authority in England. Copies of that material have been placed in the Vote Office and the Library. In keeping with our promises to modernise government, all the details are also available on the internet. The settlement is another step in the Government's modernising agenda. It provides a good grant increase and a stable financial environment. Together with best value and our other reforms, it will

enable councils to plan and deliver better services for their people. I believe that it will be widely welcomed and I commend it to the House.

Mr. Nigel Waterson: I thank the Minister for Local Government and the Regions for providing me with a copy of the statement in advance. I appreciate her observing the usual courtesy.
This is a bad week for local democracy. Today's statement has further undermined local government and local choices. Tomorrow, I understand, we shall see the local government Bill, in which the Government will no doubt persist in their attempt to impose structures on local government. It is also apparent that they are trying to downplay the significance of this announcement. A couple of days ago, they had a compliant Back Bencher table a question for written answer. It seems clear that plan A was to avoid making a statement in the House altogether. Indeed, the timing of the statement says it all: it shows, yet again, their contempt for Parliament, even though the statement is significant for millions of council tax payers up and down the country.
The Government talk about "stability"—that word appears about five times in the first few lines of the statement—and seem to think that, because no changes are proposed this year for the methodology of grant distribution, and because a previous announcement gave funding plans for three years, there is no need for any fuss. Surely the Minister can see that it is no consolation for councils, especially rural ones, that are being treated unfairly in year one to be told by Ministers that they will continue to be treated just as unfairly in years two and three. That means a three-year prison term for rural communities, with no escape and no time off for good behaviour.
May I give a cautious welcome to the Minister's announcements about business rate revaluation? We are pleased that there will be transitional relief, especially for smaller businesses, but it remains to be seen how dramatic the shifts in revaluations across the country will be. Why will the Government not embark on a fundamental review of business rates?
I have a number of questions on the specifics. Why does the Minister perpetuate the fiction that capping has been abolished? The Government maintain reserve powers to cap. In former times, at least local authorities knew the criteria in advance and could plan accordingly. Now they can only await the knock on the door in the middle of the night and the invitation to a ritual ticking off from the right hon. Lady. They are also intent on keeping so-called refined capping in the shape of the council tax benefit subsidy scheme. Will she acknowledge that the Local Government Association was right when it described that as
the nearly poor paying for the really poor"?
In contrast, our policy is to have no capping in the next Parliament. [Interruption.] I am glad that that is as popular with those on the Labour Benches as it is with my hon. Friends, so I shall say it again: our policy is to have no capping in the next Parliament.
Even on the Government's figures, council tax will rise by twice the rate of inflation. An average band D household is paying £100 a year more in council tax than when the Government took office. Does the Minister accept that, as a result of the settlement, council tax payers


across the country will face steep council tax rises or cuts in services, or both? Does she also accept that there will be a nominal increase of just under 5 per cent., with some rises in double figures?
Why has £150 million of the extra money for education been stripped out of the budget and recycled as payment for teachers performance-related pay? Why is that not genuinely new money? Is the £64 million announced today really new money? Will the Government meet in full the costs of implementing the teachers Green Paper?
Last year, although we had above-inflation increases for social services, some boroughs social services SSAs decreased. Those included Hackney, Lambeth and Newham—three of Britain's most deprived boroughs.
Does the Minister accept that, despite some increase in funding this year, many social services departments will remain under great pressure? Does she realise that, across the country, needy people are being turned away by their local social services, which simply cannot cope with rising demand? Did she see the report only yesterday that one in 10 social services departments is already underperforming? Why is the figure for environment and culture below the inflation rate?
The Government are consulting on a "single capital pot", but when will they release councils from their hand-to-mouth existence and let them move away from capital expenditure being dealt with on a year-on-year basis?
Does the Minister accept that, over the course of this entire Parliament, the police will receive a real increase of less than 1 per cent.—with the consequence of falling police numbers and rising crime?
Are the Government wedded to specific grants because they give Ministers more power to impose their own agenda on local government? Should not local councils be left to make up their own minds about local priorities? Why do the Government want to stifle local choice?
How can the Government even begin to try to justify robbing the countryside of more than £500 million and letting London down by grabbing £300 million? Surrey has lost £27.5 million because of the Government's fiddling the funding formula, and Oxfordshire and West Sussex have both lost almost £20 million.
In Kent, in the current year, the SSA increase was 4.8 per cent., but the increase in Government grant was only 1 per cent.—a practice that is not always understood by council tax payers. Kent has also had to increase expenditure by 5.8 per cent. to meet national requirements on. for example, firemen's and teachers' salaries—

Mr. Damian Green: And asylum seekers.

Mr. Waterson: Yes.
This year, Kent expects a council tax increase of 5 per cent.
Finally, will the Minister clear up one mystery? On 29 October, she issued a statement saying that, because the announcement provided figures for three years, she would not receive delegations from local councils. Rather grandly, she said that she would receive submissions in writing or from local government bodies. However,

in answer to written questions tabled by me, and in correspondence, it has emerged that the Minister did not stick to that resolution for very long.
Only four or five days later, on 4 November, the Minister met a delegation from Hammersmith and Fulham, which just happens to be a Labour-controlled authority—[Interruption.] It is a serious matter. Initially, the meeting was denied by the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Stretford and Urmston (Ms Hughes), but the right hon. Lady kindly wrote to me very rapidly to put the matter right. I accept that the denial was a genuine error by the Under-Secretary, although I do not necessarily accept that such errors should be allowed to happen within the Department.
Will the Minister clarify the point for us? Will she accept delegations from Labour-controlled authorities? Would she stretch a point and occasionally meet a non-Labour-controlled authority? I call on her to jettison her absurd statement that she will not receive delegations. Surely she accepts that the whole point of a democracy is that Ministers should be available to meet the elected representatives of local people and hear their genuine concerns. Otherwise, why have Ministers at all?

Ms Armstrong: I am concerned about the hon. Gentleman, who seems to have come to this House with amnesia. His statements today show that he has neglected the fact that the previous Tory Government were in power for 18 years and that they introduced the council tax and the uniform business rate. [Interruption.] We are all bored and fed up with it, but it is the reality, none the less.
Much of what the hon. Gentleman berated me about today was begun by the Tory Government. The changes that we are making have been overwhelmingly welcomed by local government, and by those outside who know and do not forget the travesty that the Tories wrought upon local government and local democracy in this country.
There was never any attempt to avoid a statement. I approached both of the main opposition parties early on—as the hon. Gentleman well knows, as I talked to him and to his right hon. Friend the Member for Wokingham (Mr. Redwood), the shadow Secretary of State. I said that we were more than happy to have a statement, but that we would not allow a statement to hold back the normal information that ought to go out to local authorities. We have worked exceptionally hard this year to get the information out earlier, so that local authorities are more in control of their budget processes.
We are having a statement today so that information is not delayed until next week. We want to get the information out as soon as possible so that local authorities have as much ability as possible to plan and develop their budgets. It is a pity that the hon. Gentleman wanted that to be delayed until next week.
Local government has overwhelmingly welcomed the period of stability. Those involved feel more in control of their budgets. They know that being able to plan over a three-year period with a clearly established framework has enabled them to engage more effectively with the public. They will continue to do so, so they can plan their spending and their priorities more effectively. Again, it is a pity that the hon. Gentleman is so out of touch with what is going on.
Opposition Members try to raise the subject of rural areas every year. However, it simply bears no relationship to the facts. We have treated all authorities fairly, whether urban or rural. The most sparsely populated authorities have received average SSA increases this year of 4.7 per cent., compared with an average of 4.4 per cent. for England as a whole. Shire areas have received average SSA increases of 4.7 per cent. Shire counties, which provide most of the services in shire areas, have received average SSA increases of 5 per cent. this year. Once again, reality has escaped Tory Members.
I am grateful for the hon. Gentleman's cautious welcome for our business rate proposals. He asked why there was no fundamental review of the uniform business rate. He seems to have forgotten that we have had a White Paper and consultation, and we announced that we would not change the uniform business rate. What I have announced today is a review of the valuation. The world would think that we were rather peculiar if we had another fundamental review within two years after the first one.
We believe that council tax benefit subsidy limitation operated in a more straightforward way than people anticipated at this time last year. We believe in the principle that, where there are excessive increases, the burden of those should not be placed wholly on the tax payer.
It would be cruel to say too much to the hon. Gentleman about capping. We are seeking to establish an effective partnership with local government where we enable it to make decisions about its council tax. However, we reserve the right to intervene when council tax payers are suffering. That has been clearly accepted by local government and, as I say, it meant that last year we did not have to impose any capping. The hon. Member for Eastbourne also made spurious points about council tax rises. Council tax rises declined last year from 8.6 per cent. to 6.8 per cent. and I look for the continued exercise of such restraint from local government.
The hon. Member for Eastbourne obviously wanted to make a point about the £150 million loss of education funding before he had read the statement—but he then tried to recover. Money has been announced today that was not originally in the settlement but which will cover that sum, and the teachers Green Paper arrangements will be funded in full. Some £1 billion has been made available in the comprehensive spending review for that purpose.
I was amazed to hear the hon. Gentleman talk about needy people being turned away, because—as he knows—this settlement is far more generous than any his Government managed to give local government. What is more, he fell into the trap that the Tories fall into again and again—of confusing performance with the level of funding. If the hon. Gentleman had looked carefully at the figures announced yesterday, he would have seen that they demonstrated that half the authorities named yesterday by the Minister of State, Department of Health, my hon. Friend the Member for Barrow and Furness (Mr. Hutton), had gained from the changes made in funding last year, and half had lost. The relationship that the hon. Member for Eastbourne tried to describe does not exist. We are trying to improve performance and give councils the framework to do so through best value, so that they can ensure they get the best performance for the money spent.
The hon. Gentleman mentioned delegations. Some Opposition Members will know that over the years I have met them and their delegations. It has always been my practice and policy, whenever hon. Members request a meeting, to seek to agree to such requests. I do not hold all the meetings in the Department, because the visits frequently take place outside the formal consultation period and the Department could make very little response. I see the delegations in the House so that I do not take up civil servants' time and cost the taxpayer additional money.
I seek to hear from all hon. Members about their concerns and anxieties. As the hon. Member for Eastbourne knows, I met representatives from Hammersmith and Fulham at the request of their Members of Parliament, and it just so happened that that was entered in my diary as a meeting with those hon. Members. That is why the problem arose in the Department; it had nothing to do with the Department.
It is true that I am keen to have a proper relationship with local government. I am also always happy to meet Members of Parliament and listen to their concerns. But it is also right that local government, the Department and Ministers should use their time effectively. Of those issues on which authorities are able to make representations, virtually none has changed this year. On that basis, it is fairer to them—and in the interests of the best use of Ministers' time—that I see the associations and hear from them about the interests of their members. To see every individual authority would not be a good use of my time or of theirs.

Several hon. Members: rose—

Mr. Deputy Speaker (Mr. Michael Lord): Order. Before I call the next speaker, I must tell the House that very many hon. Members are seeking to catch my eye, and unless we have short questions and reasonably short answers, an awful lot of them will be disappointed.

Mr. Harry Barnes: I cannot believe what I have just heard from the Opposition. Either they have been converted to a completely new position or they are talking through the backs of their heads—I assume the latter. They created our present problems in local government finance.
Is it not disappointing, however, that despite what was said earlier about the three-year provision, there is no change in the standard spending assessment methodology, so the evils introduced to the system by the previous Government through the Local Government Finance Act 1988 have not yet been fully tackled? The effects are bad in Derbyshire, especially in north-east Derbyshire, where the weighting in the area cost adjustment system needs changing, and the enhanced population figures need to be taken into account. For my area, that would be like the relief of Mafeking. Is there any hope that it will happen?

Ms Armstrong: I have announced that we are undertaking a fundamental review of the distribution method for revenue support grant. I hope that north-east Derbyshire, and my hon. Friend, will take an interest in that. A questionnaire was sent to every authority, and the overwhelming response was that they did not like the SSA system and would like to consider an alternative.
Other interesting alternatives are being suggested by some of the groupings within the Local Government Association and the Association of London Government, and I look forward to finding out over the coming year whether it will be possible to change to a system that does not rely on the extremely complex SSA settlement system, which local authorities often feel is perverse.

Mr. Adrian Sanders: I thank the Minister for having made a copy of her statement available in advance. However, is it not a statement designed to ensure that the Chancellor gets a pat on the back while councillors get it in the neck? Does it not confirm the shift in taxation from central Government to the council tax payer and the users of services?
Do not some of the Government's figures show council tax rising at twice the rate of inflation, while the Treasury forecasts an even higher figure of 7 per cent? Despite the £64 million announced today, is there not still a danger that taking money out of the general education budget to cover performance-related pay will mean that one teacher's pay bonus is another's P45?
Finally, when will the Government get their tanks off town hall lawns and allow local communities to set their own priorities without the fear of capping?

Ms Armstrong: I had hoped that if I gave the hon. Gentleman the statement in advance, he would be able to work out that we were not taking the money for teachers pay out of the settlement for schools. Teachers have to be paid, and we must ensure that the money is there, but I am sure that when the hon. Gentleman reads again what I have said, he will understand that the money is additional and that the same sums will go to schools as we promised last year, so there is a substantial increase.
The hon. Gentleman complained about council tax going up by twice the rate of inflation. I hope that authorities will do everything possible to hold council tax down because they are getting a substantial settlement this year. They also have the best value system, which is already demonstrating that authorities using it can make significant efficiency savings which cannot be described as straightforward cuts. We look to the rest of local government to do the same.
I think that the council tax payer will soon recognise that the Government's contribution will amount to an increase of more than double that required to keep place with inflation, and that that is a good deal for local government.

Mr. Ronnie Campbell: We need take no lessons from the Tories on local government finance, given that they introduced the poll tax, which cost the tax payer £6 billion.
I welcome the Minister's statement that she will look at the formula for standing spending assessments, which we have been trying to change for years. My hon. Friend will be aware of the problems encountered in Northumberland since it was introduced. For example, it is remarkable that the formula gives a greater population sparsity element to the city of Bradford than to the county of Northumberland. Does she accept that we need a correct formula that is fair for everyone?

Ms Armstrong: I thank my hon. Friend. I know the problems in Northumberland, which I visit often. County

councillors regularly lobby me. I assure my hon. Friend that Northumberland will continue to receive the highest SSA per head of population of any shire county.

Sir Peter Emery: I realise that one must examine the Minister's statement carefully, but does she accept that there is little doubt that overall it is bad news for local government? It contains nothing to correct the particularly bad treatment meted out over the past two years to rural local authorities, which it appears will have to continue to suffer.
Will the Minister look specifically at the guarantees given by the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Sunderland, South (Mr. Mullin), on the negative housing subsidy arising out of the housing revenue account? We were promised that that matter would be attended to, but the Minister's quite long statement today did not refer to it.
The Minister talked of performance being reflected in levels of funding, but most of the 23 councils so affected have been among those performing best. In my own district of East Devon, the cost is likely to be something approaching £1 million. That cannot be fair, and what will she do about it?

Ms Armstrong: I have already made it clear that rural counties are doing better than average this year, and I invite the right hon. Gentleman to look more closely at the figures later. I know that many figures have been given out today and that it is difficult for hon. Members to grasp them immediately.
On the housing matter, I can tell the right hon. Gentleman that it has been the subject of a consultation that I started when I had responsibility for housing. That consultation continues, and we do not expect to make a decision in the short term.

Mr. Gerry Steinberg: I welcome the increase in education spending provided by the Government in recent years. Schools in my constituency have benefited from more computers, new buildings and major repairs. My right hon. Friend's constituency is also in Durham, so is she aware that many small schools there are still struggling because of the formula used for local management of schools? The formula means that, as pupil numbers increase and decrease, small schools sometimes do not have enough money to pay teachers salaries or to retain staff numbers. That is a major problem in my constituency, and I suspect in my right hon. Friend's. Will she contact my right hon. Friend the Secretary of State and her departmental colleagues to see what can be done to support small schools? Those schools do an excellent job but, because pupil numbers fluctuate, they suffer because they cannot make plans.

Ms Armstrong: I am well aware of the problem. I suspect that the small schools in my constituency are even smaller than those in my hon. Friend's, and it is certainly true that some schools in the north Pennines have very small pupil populations.
I have discussed the matter with my right hon. Friend the Secretary of State and with my right hon. Friend the Minister for School Standards. She has already announced additional help for small schools, but is also keeping the


matter under review. We want to ensure that all pupils, regardless of the size of their schools, get the opportunities that they need and deserve.

Mr. David Curry: Will the Minister reaffirm the essential principle of non-hypothecation—that is, the Government provide funding but local authorities are free to decide where best to spend it? To that end, would the right hon. Lady ask the Secretary of State for Education and Employment—before he begins his habitual tirade—not to start telling local authorities that they must spend their money in any particular direction?
If last year's increase in council tax was 6.8 per cent., against the predicted 4.5 per cent., why should it be less than 6.5 to 7 per cent. again this year, as against the Government's predicted amount? Police funding will be particularly sensitive, given the need to spend money on new communications equipment and on early retirement, which is still a tremendous burden on the police.
Finally, do the Welsh intend to apply the council tax benefit limitation principle?

Ms Armstrong: Of course councils make decisions about their budgets, but the Government have the right to let councils know of their priorities, which has led to extra funding being added to the settlement. This issue has always been debated, and will, quite rightly, continue to be debated.
I am afraid that I have forgotten the right hon. Gentleman's next point.

Mr. Curry: It was about council tax.

Ms Armstrong: We make no prediction on council tax increases. As for the 4.5 per cent. for council tax benefit subsidy limitation, we are not saying that authorities should set council tax at that level. That would kick in only if their increase in standard spending assessment were 4.5 per cent. or less; it is not a prediction of council tax levels. Indeed, Conservative and Liberal Democrat Members predicted last year that the figure would be substantially higher than 6.8 per cent. We do not predict—they do, and they got it wrong.
My right hon. Friend the Home Secretary will be dealing with police budgets, and I am sure that the right hon. Gentleman will put his point to him. As for the right hon. Gentleman's third point, that is a matter for the Welsh Assembly.

Mr. Jeremy Corbyn: The Minister will be aware that last year a number of Members representing inner-London constituencies—including me—made strong representations to her about the level of Government support for inner-London local authority services, owing to the very high cost of service delivery and the acute social problems arising from transient communities and a high population turnover. She will also be aware that over the past year the situation has become much worse, given the problems caused by the rapid rise in house prices.
Is my right hon. Friend prepared to receive any further representations, part way through this comprehensive spending review and in advance of any other grants that she might give, on the very high costs of inner-London

services? Is she aware that, two years after the Government came to power, substantial cuts are still being made to services in my borough because of the local authority's funding problems? That impacts badly on other Government efforts made through welcome measures such as the single regeneration budget, which affects part of my constituency.

Ms Armstrong: I have already said that there is a review of the method of distribution. My hon. Friend's concern for London areas and the Conservatives' concern for rural areas must both be accommodated in the review. The Association of London Government—along, I am sure, with my hon. Friend's authority—is already thinking hard about the options and about how future funding will be taken forward. I will be having discussions with it over the next few months, after which we shall issue a consultation paper to consider how to proceed.
This year's increase in SSA for education in my hon. Friend's borough is 5.1 per cent. That compares with a national increase of 4.5 per cent. for education authorities. I know that there are budget problems, though not all of them have arisen simply because of funding. Some have related to management, and the authority is trying to sort out that problem so that people in Islington will know that they will receive decent services for the amount that they are able to pay.

Mr. Patrick McLoughlin: Can the Minister assure us that no person aged over 65 will pay more than a 75p increase in council tax?

Ms Armstrong: Council tax is not a matter for me. The hon. Member for Eastbourne (Mr. Waterson) has asked me not to interfere in councils, but the hon. Member for West Derbyshire (Mr. McLoughlin) asks me to tell him what the council tax increase should be. Perhaps he should collaborate with his Front-Bench colleague.

Mr. David Kidney: It must be a novelty for the Opposition to see a Government who both promise real-terms increases year after year and keep those promises. Councillors and residents in Staffordshire will certainly appreciate the extra money in this three-year settlement. May I tackle my right hon. Friend on a technical point about the operation of the formula for distributing money from central to local government? Has she given any thought to—or will the consultation consider—raising funding for councils at the bottom of the Government's funding table?

Ms Armstrong: My hon. Friend has taken particular interest in that idea. Authorities whose education funding is below average held a meeting in Staffordshire last week. The problem with averages is that some authorities are bound to be below while others are above. That is the nature of things. We are searching for fairer funding for all, but it is difficult. Overcoming past problems has led us to make significant funding injections, but some authorities and residents still feel sore. I hope that our review will come up with something that local people will find more rational and easier to understand.

Mr. A. J. Beith: Does the Minister recognise that the settlement cannot allay the concerns of the many children, parents and teachers who


have written to her about the situation in Northumberland? Children there receive education that costs perhaps £500 or £1,000 less than is spent in other parts of the country. That results from settlements under both the previous Government and the present one that the local Labour council leaders have described as unfair. Does the Minister realise that while we wait for the review process to be completed, some children will have completed most of their years in education with inadequate funds?

Ms Armstrong: I understand that point. I have met members of Northumberland county council several times. My constituency abuts Northumberland, and I regularly meet folk from the county in my normal constituency activities. It is difficult for local people to understand what is happening.
The formula tries to take account of need and, to reflect the additional sparsity factor, Northumberland receives the highest amount per head of population for any shire county. Every authority feels that it should receive more, and we shall probably never reach a position in which everyone feels fairly treated. We are trying to put more money into education and to ensure that it is distributed so that every child receives the opportunity that he or she needs.

Judy Mallaber: May I warmly welcome the review of local government finance and ask my right hon. Friend what input local authorities will have in that review? In particular, will she consider representations from authorities such as Amber Valley, which is implementing the Government's modernising agenda, but suffers under the over-complex revenue support grant formula, to which she referred, from being a mixture of urban and rural authorities?
May I also reiterate the comments of my hon. Friends the Members for North-East Derbyshire (Mr. Barnes) and for Stafford (Mr. Kidney) about the position of a number of education authorities as a result of the system introduced by the Conservatives? For example, a secondary school in my constituency gains several hundred thousand pounds less than an equivalent school in a southern county.

Ms Armstrong: Of course, local authorities will be involved as much as they wish in the review. Officials from the Department have already been travelling around the country holding regional briefings to encourage authorities to think how things could be done differently. If we cannot find a way forward, we will have to revert to standard spending assessments. I hope that we can find a way. The LGA is very much part of the present discussions at official level. We will lay all the suggestions before the House and local government so that every authority will be able to have an input.

Mr. Christopher Chope: Will the Minister withdraw her earlier irresponsible statement to the effect that increases of 4.5 per cent. would not cause any hardship to council tax payers? Does she realise that for Dorset pensioners such as increase would be far in excess of 75p a week? Why will the right hon. Lady not speak out now and say that she will condemn any council

that increases its tax by more than the rate of inflation; or does she realise that that aspiration is totally unrealistic given this mean and vicious settlement?

Ms Armstrong: Of all Tory Members, the hon. Gentleman should know better. He was a Minister in the Department and presided over very vicious settlements—much more vicious—for local government. He was there when the poll tax was introduced and, I suspect, lost his seat because of it, so we will take no lectures from him. Let me make it absolutely clear that I did not say that any level of increase was all right. I said that the Government do not set the guidelines—that is a matter for councils.

Mr. Tony Colman: As an honorary member of the board of the London First Centre, the inward investment agency for London, I have for about eight months been pressing my right hon. Friend the Minister to ensure that there is full transitional relief for the revaluation of the base for the uniform business rate. On behalf of the business community in London—both current and future—may I thank her for the full phasing that she announced and in particular for the additional cherry, which is the additional help for small and medium-sized enterprises? Will she comment on the variability of the change in the base for the business rate throughout London? Some areas have, perhaps, overheated in the past five years and others have not—I realise that advantages may accrue to Putney in my constituency, where rates may be zero or falling.

Ms Armstrong: This is one of the real anomalies. The revaluations throughout the country have resulted in extremely variable changes. That is partly due to the fact that the previous revaluation for 1995 was actually undertaken in 1993, when there was a severe slump in parts of London. The Government are seeking to ensure that they do not repeat the problems caused by the previous Government with boom and bust, and that we have more sustainable growth throughout the country. The variations are one of the reasons why I announced a review of the revaluation process, to find out whether we can get more fairness and stability and fewer of the excessive moves that were evident in the latest revaluation.

Mr. John Wilkinson: My constituents in outer London will have little to thank the Minister for in this settlement. First, is it not the case that owners of businesses are facing an increase in the business rate of up to 5 per cent. per annum in spite of transitional relief, on top of the fact that if they go to work by car they may have to pay car-user charges and, if they own the business, they may have to tax parking space for their employees? When they get home to Hillingdon, they will find that their local authority is not getting adequate compensation for the additional cost of housing asylum seekers. Is it not true also that their quality of life is deteriorating because the police settlement—1 per cent. in real terms—is far below the necessary figure of about 3.5 per cent. in real terms that is required to maintain the same level of service?

Ms Armstrong: I do not agree with the hon. Gentleman. His constituents in Hillingdon will see a 5.2 per cent. increase in their SSA this year and that is


more than double the increase in inflation. The hon. Gentleman's residents in Hillingdon will recognise that the Government are fulfilling their promises to ensure that public services are funded so that opportunities for local people are better.

Mr. Michael Jabez Foster: May I welcome my right hon. Friend's proposals to review commercial rate values yet again, to create more fairness? In certain parts of the south coast—my constituency in particular—flats on the domestic market have gone down in value since the last valuation, whereas houses have gone up. As a consequence, many of my lower paid constituents who have purchased cheap properties are paying as much as or more than those with houses. In those circumstances, will my right hon. Friend review as soon as possible the domestic rate values which affect the council tax for those constituents?

Ms Armstrong: There was a review of council tax banding and we announced that we were not changing it at this stage. We said that we would return to the matter, but I cannot promise my hon. Friend that that will be done in this Parliament. As there is a banding system, flats are likely to be in a lower band than houses. I hope that we can ensure that his constituents do not suffer because of changes in property prices.

Mr. Robert Syms: This statement will be greeted with disappointment in Poole simply because the area cost adjustment, which makes a tremendous difference to the amount of money that we have, is not being altered. I have no doubt that the local authority and local Members of Parliament would want to meet Ministers to discuss that matter further. The Minister seemed a little confused. At first she said that she would not see any delegations, but then she said she was meeting one from Hammersmith and Fulham at the request of their Members of Parliament. If the Member of Parliament for Poole and the borough council request a meeting, is she saying that she will refuse to see us: yes or no?

Ms Armstrong: As the hon. Gentleman knows, I have spoken with him about Poole and met his councillors. We are entering a formal consultation period, which is different from the discussions on which I embark during the rest of the year. Had Poole wanted to make representations about the area cost adjustment, it knew that the time to do so was during last year's formal consultation period. We said that we would not move on area cost adjustments this year because we were introducing three-year stability. The authority had the opportunity to make representations on that matter last year.

Kali Mountford: I am very pleased to hear that there is to be a review of local government finance, which is much needed. My right hon. Friend was so right to say that previous settlements have brought about some perverse results. If we are to have some fairness, objectivity and genuine assessment of need and of the anomalies that arise—not merely between north and south but within regions and local authority areas—is it not essential not only to encourage authorities to take part but to sell the review as something on which they must

embark? Can she also tell us how soon the review will be completed? It is essential for many of us who want fair settlements in the future.

Ms Armstrong: My hon. Friend is right; the matter needs to be fully discussed throughout the country. I assure her that we are doing whatever we can to ensure that that is done, so that authorities have the opportunity to put forward their ideas. I am keen to get on with the review, but I do so with a sense of realism because we are unlikely to find a system that suits the needs of everyone. However, there are other ways in which we can proceed, and I am anxious to find a method that is easier for everyone to understand. I defy anyone to have a close understanding of how every SSA works; it is the most complex of systems. For the electors, to whom it matters most, the system is virtually impenetrable. We have a responsibility to try to find something better for them.
We are getting on with the matter. I hope that, certainly by the middle of next year, we may at least be clear about the options and will be able to hold consultations on them.

Mr. Owen Paterson: The previous regime that ran Shropshire county council—the Liberal and Labour parties—increased council tax by 24 per cent. during the past two years. As a result, the Minister asked senior representatives of the council to come to London during the summer. Mr. Malcolm Pate, whom my hon. Friend the Member for Ludlow (Mr. Gill) and I met last week, is now the leader of the Conservative controlling group on the council. He was told, and reported to me, that the Minister had promised a 6.1 per cent. increase for the next three years, in the interests of stability. The council has now received information that the increase will be 5.4 per cent.—

Mr. Deputy Speaker: Order. I trust that the hon. Gentleman will put a question.

Mr. Paterson: Were those representatives deliberately deceived by the Minister? If not, will she confirm today that the increase stands at 6.1 per cent., as she promised them?

Ms Armstrong: I promised no one the exact amount that would be received this year. The Government announced, throughout the comprehensive spending review, the amounts that would be available as a whole to councils each year, and that we would not be changing any of the methodology. We said that the only changes would reflect data changes in each area. I certainly did not tell any authority that it would receive a specific amount every year. I said that their treasurers would have an idea as to what was happening, because they knew the overall figures and they would know about the data changes and other changes in their areas. That is absolutely true.

Mr. Barry Gardiner: My right hon. Friend will recall from last year that my local authority of Brent received the worst settlement in the country, despite being the 20th most disadvantaged. None the less, I hope that she will be pleased to learn that even Brent council is grateful for a period of stability this year, so that it can plan its budget.
I welcome the review of the basis of local government funding. I urge my right hon. Friend to take serious note of the problems faced by boroughs such as Brent, where over 106 languages are spoken in our schools and where the loss of ethnicity criteria in children's social services last year had the most devastating effect. I trust that she will take that into account.
Finally, on behalf of my business community—for small businesses in Brent—will she tell me what the business rate change is likely to be for them in the coming year?

Ms Armstrong: We will, of course, look at the needs of all authorities in the review, although, as I said, the more I hear today, the less confident I am that we shall find something that everyone is happy about. However, my hon. Friend will be aware that because we have ensured that no authority will receive less grant than last year, some protection has been provided for Brent. I know that that will be welcome.
There are huge differences in business rates throughout the country—even within London. For inner-London authorities, the revaluation has produced an increase of about 21 per cent. for large properties and 34 per cent. For—

Mr. Gardiner: Brent is in outer London.

Ms Armstrong: Yes. In outer London, rate bills will fall for 48 per cent. of large business properties as a result of revaluation. The liability will fall for 56 per cent. of small properties. In relation to small businesses, I assure my hon. Friend that no business will receive an increase of more than 5 per cent. next year.

Mr. Graham Brady: The Minister will be aware that, since 1996, when Labour took control of the borough of Trafford, council tax there has repeatedly increased above the rate of inflation. If she does not know that, her hon. Friend the Member for Stretford and Urmston (Ms Hughes) will tell her. What advice would the Minister give to Trafford pensioners, whose income is to be pegged to the rate of inflation? How can they deal with a council tax that continuously rises by more than the rate of inflation?

Ms Armstrong: I wonder why the hon. Gentleman never put that question to the Conservative Government.

Mr. Steve Webb: Is the Minister aware that in rapidly growing authorities such as my own, South Gloucestershire, schools have to educate children for free, because the data on which funding is based are so out of date? What progress is she making on using information based on the number of children in our schools now, rather than months, if not years, ago?

Ms Armstrong: We have to use reliable data, collected in a way in which everyone can have confidence. That is as true for authorities that are gaining population as for those that are losing it. The hon. Gentleman will be pleased to know that this year's settlement will reflect changes in data.

Orders of the Day — Public Accounts

Mr. David Davis: I beg to move,
That this House takes note of the 68th and 69th Reports of the Committee of Public Accounts of Session 1997–98, of the 1st to 38th Reports of Session 1998–99 and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on these Reports (Cm 4279, 4285, 4312, 4335, 4380, 4381, 4394, 4408, 4456, 4469, 4471 and 4515).
One hundred and thirty years ago, Gladstone looked beyond the immediate horizon of day to day politicking to set in train a package of public service reform that has been fundamental to the good governance of Britain ever since, and which has provided a model for the rest of the world to follow. That initiative helped to mark out Gladstone as one of the giants of the last century. The most important aspects of the package of reform related to financial accountability and, in particular, to the setting up of the Public Accounts Committee.
On the eve of the 21st century, the Government have the best opportunity since Gladstonian times to show similar vision and to modernise public accountability as they modernise government. In that way, they will be able to meet the ever more demanding needs of the citizen, and to reinforce public confidence in the process of government. That brings me to the centre of my challenge today: to make the House—this packed House [Laughter.]—realise that not only is financial accountability an interesting and positive force for improvement in public service, it is a central plank in our democracy. It will be every bit as important in the next century as it was in the last.
I start by reflecting on the past year. The Public Accounts Committee produced 40 reports, on matters as diverse as financial control in the European Union and the way in which the electricity regulator secured a benefit for the customer.
The number and variety of reports that we are able to produce is a testament to the tripartite structure. First, we rely greatly on the reports produced by the National Audit Office and the Northern Ireland Audit Office. Sir John Bourn, John Dowdall and their staff of experts produce a tremendous range of professional and interesting material from which we choose. The House should be proud of them and grateful to them.
The Committee Clerk, Ken Brown, and his staff cope magnificently with the volume of material that we cover. Ken offers sage counsel to the Chairman, keeps him in line and keeps the Committee's business flowing seamlessly. I offer the thanks of the entire Committee to all of them.
Finally, much is due to the members of the Committee, who co-operate well and work hard with diligence and tenacity. Their contribution, in the face of the Committee's heavy work load, makes a significant demand on their time. I do not expect to be disagreed with by Members in the Chamber today. I offer all of them my personal thanks for making my task easier.
In the past year, we have lost some valuable members. I pay tribute to my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) and to the hon. Members for Reading,


East (Jane Griffiths) and for Halton (Mr. Twigg); and in particular to the right hon. Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan), who had served on the Committee since 1979. All those Members have made valuable and distinctive contributions and served the House well.
I notice that the hon. Member for Liverpool, Garston (Maria Eagle) is leaving us at the end of the debate, so I offer personal thanks to her for all the very distinctive and distinguished input that she has made to the Committee. Her contribution would augur well for a stellar future career. I shall also miss her advice on chess.

Mr. Charles Wardle: That is the kiss of death.

Mr. Davis: Yes; I finish off most people that way.
I welcome the hon. Members for Brent, North (Mr. Gardiner) and for Newbury (Mr. Rendel) and my right hon. Friend the Member for Skipton and Ripon (Mr. Curry), who have all joined the Committee since the last PAC debate, and who, I am sure, will be great assets to my team.
It also gives me great pleasure to welcome to the Committee the new Financial Secretary to the Treasury, the hon. Member for East Ham (Mr. Timms). He takes the place of the hon. Member for Hornsey and Wood Green (Mrs. Roche), who has moved on. This is my third PAC debate and my third Financial Secretary. The others have since been promoted, so I hope that the hon. Gentleman's new post will prove, and be viewed as, a blessing rather than a curse for him.
Let me turn to the headline figures for the year. The National Audit Office and the Committee generate substantial savings—some £365 million in the past year alone. Examples include improvements in the management of sickness in the Metropolitan police that led to a reduction of £23 million in the cost of sickness absence when compared with the previous year. That is equivalent to about 513 officers available for duty.
Improvements in the conduct of privatisations that have followed from our recommendations saved an estimated £63 million last year. Over three years, savings of £1.2 billion have been achieved equivalent to well in excess of £7 for every pound spent to run the National Audit Office.
Our work also has a qualitative impact. Work on underpayments to public service pensioners prompted the Department of Social Security to clarify and simplify the way in which it communicates with pensioners. Our work on the cervical cancer screening programme caused the National Health Service Executive to change its position on setting a target date by which all screening laboratories must meet the standards expected. That will now be accomplished by March 2000.
In total, some 1,900 significant changes to systems have arisen from the work of the National Audit Office and the PAC. Our work is of practical benefit to Government, as shown by the fact that some 92 per cent. of recommendations that were made in the past year were accepted.
Our reports can be categorised in many ways. I shall confine myself to four broad themes: first, project management, especially in information technology;

secondly, better service delivery; thirdly, financial irregularity and mismanagement; and fourthly, the private finance initiative. I shall not dwell today on one of the major issues that dominated our work this year—the millennium bug. With just four weeks to go, the country will know soon enough whether the Government have succeeded in protecting vital services.
The first theme to emerge from our work concerns project management, especially information technology. That has been a key feature of the Committee's work in recent years. Failure to manage major projects successfully continues to plague this Administration, as it did the last. Enormous sums of money have been wasted, key public services have been disabled and the lives of citizens have been disrupted.
NIRS2, the new national insurance recording system, affects every adult in the land at one time or another, and we found a clear failure to deliver services to the citizen. It is reasonable to expect the state to be able to calculate correctly the pensions and benefits due to its citizens, but in this case many months elapsed when that could not be done. The failure to get that system working plunged many thousands of people, including those in the greatest need, those recently bereaved and those moving into retirement, into uncertainty and fear: uncertainty about the level of their future income, and fear that they might be running up a debt that they would have to repay, the value of which they do not know.
Even more troubling is the fact that, apparently, lessons are rarely learned. Yesterday, the Committee approved a report, which will be published soon, which summarises the lessons arising from an examination of more than 25 reports about IT projects published by the PAC and the NAO in the past 10 years.
That benchmark report reflects the Committee's concern that the failure to deliver Government IT projects places in jeopardy the success of almost every Government programme or initiative and makes any pledge about IT delivery of Government services look optimistic in the extreme.
Indeed, at one point—when considering the work of the immigration and nationality directorate, on which the Committee has yet to report, and with reference to the Passport Agency, on which we have yet to take evidence—the right hon. Member for Swansea, West (Mr. Williams) was moved to comment about the failure of the IT system that it had led to a situation where
foreigners cannot get in and British cannot get out.
I do not want to pre-empt our report, but some obvious lessons stand out from the work over the years on IT projects.
On the inception and design of projects, the lesson is that it is necessary to analyse and understand fully the implications of the introduction of new IT systems for businesses and customers. There was a spectacular failure in that regard in relation to NIRS2.
On the management of projects, the lesson is that key decisions on IT systems are business decisions as well as technical ones. Senior managers have a crucial role in driving through the successful development of IT systems.
On relationships with suppliers, the lesson is that relationships between Departments and suppliers will have a crucial effect on the success of the project.


Contracts between Departments and suppliers must therefore be clearly specified. There have been repeated failures in that regard.
On post-implementation issues, organisations must learn lessons from projects undertaken, which can be fed back into the consideration of later projects.
I welcome the Government's commitment in their "Modernising Government" White Paper to a more co-ordinated and strategic approach to IT across Government. I also welcome the recently announced Cabinet Office review of major Government IT projects designed to ensure that future systems run effectively, deliver value for money and apply best practice.
However, poor project management does not stop with IT. Lessons can be replicated elsewhere. For example, our report on the management of the final part of the Guy's hospital rebuilding programme concluded that the project had been allowed to spiral out of control for nine years before any sense of realism was applied. The project was completed over three years late, at a cost to the taxpayer of an extra £98 million. Obviously, that extra funding had to be found from elsewhere in the national health service budget.
Poor project management can spell inconvenience for the citizen and can have disastrous effects for the taxpayer. Headline failures of major projects, such as the problems with NIRS2 and the Passport Agency fiasco, are writ large. The Committee is also increasingly concerned about the quality of service that citizens receive as they interact with Government.
That brings me to my second theme—better service delivery. My starting point is that taxpayers have a right to expect high standards of service from those public bodies that spend their hard-earned cash—most families pay well over £300 a week in taxes, in one form or another. Most important, individuals who are vulnerable or in need have a right to be confident that their interests will be safeguarded by the state. I am sad to say that we have found that that has not always been so.
The Public Trust Office looks after the financial interests of about 22,000 people with mental incapacity. It manages or supervises the investment of some £1.4 billion of patients' money. It charges them about £11.5 million for the privilege.
The Committee first considered the issue in 1994 and, as a consequence, published one of its most critical reports of the decade. Revisiting the subject this year, we found that the improvements that we had been promised had not been delivered and that, worse still, in some important areas performance had deteriorated markedly. That fell far short of what patients have a right to expect. The PTO had failed properly to protect the income and assets of patients. In many cases proper accounts of patients' income had not been received and about 90 per cent. of the accounts that were received were late. The PTO had missed many of its key performance targets, including important ones such as for the numbers of visits to patients. Its financial management, which is typified by its inability to produce accounts that could be audited, was appalling. Patients have been failed at every turn.
Needless to say, our report was strong, and I was delighted to see the response from the Lord Chancellor's Department. Sir Hayden Phillips, the permanent secretary

of the Department, has not, historically, been a pin-up of the Committee. However, he showed great willingness to accept our findings and to commit to taking firm action. That provides a model for the ideal relationship between the PAC and Whitehall. As a consequence, the service to those that the PTO was supposed to serve will be enhanced considerably. Professional receivers will be appointed to look after the affairs of patients and the PTO will impose sanctions for poor performance. Minimum standards will be set for visits to patients to check on their financial welfare and there will be detailed monitoring of returns from investment fund managers.
The citizen also has a right to expect that the Government, when spending taxpayers' money, will act in a co-ordinated manner and that one Department's spending decisions will take into account the consequences on all others. That point was well illustrated by the Committee's 27th report on the work of Her Majesty's Customs and Excise and its operation of the red channels.
We discovered that decisions had to be taken to reduce the staffing of red channels. Reliance was placed, instead, on declarations—which were frequently made by telephone—of dutiable goods brought into the country. That policy delivered a short-term financial benefit, but I am concerned that such decisions can be taken without consideration of the long-term social costs of increased smuggling, particularly of drugs, that will inevitably arise as a consequence. The Department did not even estimate the cash lost by non-manning of the red channels, let alone consider policing costs and the other social costs that might have gone with the decision.

Mr. Tam Dalyell: I read that report and Dame Valerie Strachan's evidence with considerable interest. Did the Committee consider at any time the problem of anonymous numbered bank accounts?

Mr. Davis: No, the Committee did not examine that particular problem. I raise the issue at this point, because I was primarily concerned about the lack of focus on the returns to the Government, to taxpayers and to society of a short-term financial saving. The Committee focused, as it often does, on a narrow issue—in this case, the red channels—but, as the hon. Gentleman's question implies, the decision had very broad consequences.
My third theme—financial irregularity and management—is a perennial one -for the Committee. This year, the Committee broke new ground in our work on financial management and control in the European Union. We visited Brussels and Luxembourg, not to talk just to the European Court of Auditors, but to commissioners, Commission staff, parliamentarians and others, so as to get to grips with the scale of the problem and the actions in hand to address it. The Committee's conclusions are provided in our 29th report.
Our visit followed immediately on the refusal of the European Parliament to grant discharge to the European Community's budget and the subsequent resignation of the European Commission. We were frankly staggered by the scale of a problem that appeared almost endemic. Indeed, we were appalled by the culture of complacency that we found. We found a lack of clarity about who is accountable to whom and for what, a cultural emphasis on devising policy without regard to effective management,


outdated staff codes that inhibit effective management, weak financial reporting and inadequate arrangements for the detection and prosecution of fraud.
Everyone we spoke to agreed that urgent action was needed, but there seemed to be a lack of any real belief that it would be possible—and, indeed, there was little will—to make that happen. We concluded that Commissioner Prodi and Commissioner Kinnock face a monumental challenge as they seek to reform the Commission.
Again, we have received a very positive response from the Government. They stressed that they would continue to press for better accountability at all levels of the Commission and welcomed the appointment of Mr. Neil Kinnock as vice-president for administrative reform. They said that they would continue to press the Commission to introduce proposals for the reform of staffing codes, that they attached higher priority to proposals to improve the presentation of the Community's financial information and that they welcomed the change in format of the 1997 Court of Auditors report.
The Government share the Committee's concern over the Commission's failure to create an anti-fraud culture and they argued that the new anti-fraud body—which is known as OLAF—would be able to take a strong lead in creating a culture that was intolerant of fraud in European institutions. I am not entirely sure that the Committee was persuaded on that final point, but no doubt other hon. Members will refer to it in the debate. I have met Commissioner Kinnock again since our visit to discuss those important issues, and he has also enlisted the supported of Sir John Bourn and the staff of the National Audit Office in his efforts.
We are concerned about the financial management of public money wherever it is spent, as demonstrated by our series of reports about the improper use of public money by higher and further education institutions, the most notable being Halton college, which was considered in our 37th report. In that case, more than £6 million was overclaimed from the Further Education Funding Council for England for students who were not eligible, for courses that were significantly shorter than was claimed and for courses that were claimed at a higher rate than was justifiable. In those cases, there were failings in the audit arrangements.
Further education colleges appoint their own private sector auditors and, perhaps, it is time for a fundamental overhaul of auditing in the further education sector. I notice that in Scotland, the new Auditor General will audit every further education college. Perhaps similar arrangements should apply in England. We have been so exercised by the repeated failure of governance in such institutions that we have commissioned a special report, pulling out the general lessons arising from our work. That will be published in the new year.
The final historic theme emerging from our work relates to the private finance initiative. Our work on that illustrates how we take an essentially retrospective view of events—with 20:20 hindsight—and try to turn that into a degree of foresight, so that we identify lessons of wider applicability. We therefore take a forward-looking approach and our benchmark 23rd report on how to get better value for money from the PH is a good example of that. In the report, we recognised the importance of the Government finding new ways to harness private sector

business skills to identify scope for innovation in the delivery of public services. We concluded that the PFI offers enormous benefits if managed properly.
PFI contracts have been signed that involve private sector capital of more than £13 billion and that commit Departments to payments of more than £70 billion over the next 25 years. We recognise that PEI is still new and that all parties are still learning. Mistakes are inevitable while experience and guidance are continuing to develop. However, we have been frustrated by the old mistakes that have been repeated and where lessons, such as the need to get sums right—lessons which have long been established in conventional procurement—have not been learned.
Departments must avoid the temptation of the quick fix and the buy now, pay later option that delivers the service today, but at a significant cost to the taxpayers of tomorrow. Departments must evaluate risks and options thoroughly so that they agree only those deals that still bear examination several years down the line. We must be absolutely clear that there is sufficient information available to Parliament on the extent of the commitments. When items are moved off the public sector balance sheet, the commitment to vast on-going payments must be clearly understood. The PFI must not be used as an exercise in creative accounting.
That brings me to the need for greater openness and honesty in government use of information. One of the biggest revolutions that we have seen over the course of this century is the information explosion. New information technology and the spread of the internet have fuelled the growth in the collection and evaluation of information. Governments of all parties over the years have also played their part in making more information available and accessible.
Interest in such matters is not restricted to politicians and academics; there is widespread public interest in the performance of government. I therefore greatly welcome the recent White Paper, "Building Trust in Statistics". That is a laudable initiative, and it is imperative that the public should have total confidence in the integrity of government statistics. That might best be achieved by making the national statisticians truly independent and by ensuring proper parliamentary accountability. Perhaps the statistics commission should be placed on the same footing as the Comptroller and Auditor General. However, I know, Mr. Deputy Speaker, that I am wandering off-subject.
The key to securing proper accountability is the independence of those who provide information to Parliament on the performance of government. I have been troubled for some time about one aspect of the Comptroller and Auditor General's independence, and that is in relation to his audit of the Budget assumptions. That is a task undertaken by the NAO and the Comptroller and Auditor General in good faith, and of course it is right in principle that the NAO gives reassurance where it is appropriate.
I say honestly to the Minister that I take the view that reassuring financial markets, for example, about the validity of the Government's financial information is important and in the national interest. However, it is essential that the NAO's work is not misrepresented. It is required to audit changes in the assumptions that underpin the financial forecasts in the Budget, not to give a view on all the assumptions every year.
A fortnight ago, the Chancellor said that his pre-Budget forecast was based on assumptions audited by the NAO. The NAO has not been asked to audit most of the assumptions since 1997. Either the Government should ask the Comptroller and Auditor General to look at all the assumptions each year, or the Comptroller and Auditor General should be able to select which assumptions he considers. I ask the Government to consider the possibility of amending the Finance Act in the coming year to make that possible. As it stands, the position is akin to a company chairman selecting which subsidiary the auditor should audit in each year. The shareholders in a company would not feel comfortable about such a procedure. I ask the Minister to consider that carefully.
I shall now raise issues that apply to the future. All are based on the fundamental parts of the 40 reports before us. The issues underpin all those reports and are fundamental to the relationship between Government and Parliament and, in particular, the Public Accounts Committee. A number of developments at the centre of government, particularly resource accounting and modernising government, will require a major cultural change in government and will impact directly on our work.
Much has been said recently about public accountability acting as a brake on the creativity of Whitehall and on innovation and risk taking in government. Senior civil servants have held up the PAC as an obstacle to action and have fretted that they cannot deliver joined-up government for fear of incurring the wrath of the PAC. We must deconstruct that argument.
I have said on numerous occasions that I will applaud well-thought-through risk taking even where it goes wrong. The key, however, is the phrase "well-thought-through". The PAC is, rightly, tough on bureaucratic incompetence; for example, major IT projects that are poorly specified and badly managed. The instances that we have seen recently are the inevitable consequences not of risk, but of plain bad management.
The real issue for the civil service is that risk taking is counter-cultural in Whitehall. That is largely because risk taking requires a willingness to countenance failure and to abort projects that go wrong. Our experience is often that there is a failure to quantify risk and a tendency to throw good money after bad in ever more brazen attempts to convince the world that things can be put right. In such cases, we will be critical, but in cases where risks are properly measured, evaluated and managed, we will consider the outcome with an open mind. The PAC must no longer be held up by Whitehall as an excuse for the failure to innovate.
The need for public accountability must not be used as an excuse for failing to deliver services in the most sensible way. That is a further red herring traditionally used by Whitehall to justify not working in a joined-up way—I use the Government's language—with other parts of government. It is for the Government to determine who will be accountable for the delivery of public programmes, not the PAC. All we ask is that there is a clear line of accountability. If that requires three accounting officers appearing before us at once, so be it.
Our approach is not set in stone, merely bedded in the notion that identifiable individuals must ultimately be accountable to Parliament for the use of taxpayers'

money. Indeed, it was an understanding of the cross-departmental nature of the problems faced by the Government that led me to ask the Comptroller and Auditor General two years ago to carry out an examination of the criminal justice system across all Departments. That report will be coming out in a week or two.
The Committee's positive response to joined-up working, where it is appropriate, is illustrated also by the case of the Public Trust Office, which I mentioned earlier. Clearly it is sensible for the PTO's services to be provided by different agencies, and we welcome that. Similarly, it is important that the interests of its clients are protected by the setting of very clear targets for performance and outcome, for which the Lord Chancellor's Department will remain accountable.
Critical to effective accountability is the need for auditors to have adequate powers to do their job properly. Again, my approach is simple: auditors should have the same rights of access as Government. In that way, the ability of Parliament to scrutinise the activity of Government would be protected, whatever mechanisms are used to deliver public policy. Certainly it must be wrong that European auditors, working on behalf of the European Parliament, have greater rights of access within the United Kingdom than the Comptroller and Auditor General, who is working on our behalf. There is a raft of areas where the Comptroller and Auditor General's access rights have not kept pace with changes in Whitehall, and I referred to many in last year's debate.
I say to the Minister that I fully recognise that under this Government there have been considerable improvements in the access rights of the Comptroller and Auditor General to royal transport and palaces, the lottery operator and the audit of all the new non-departmental public bodies established since the election. Indeed, the Lord Chancellor, Lord Irvine—who is also not a pin-up of the Committee—when proposing that the National Audit Office should audit the new Legal Services Commission, said that the Comptroller and Auditor General should be the auditor of all public bodies unless there is a special reason why experience found only in the private sector is required for a particular body.
Lord Irvine also referred to the fact that audit by the Comptroller and Auditor General means scrutiny by
those who possess the greatest expertise in the audit of public moneys".
His sentiments have now found support in the sixth report of the Public Administration Committee, which I believe was published yesterday and which recommends that the Comptroller and Auditor General should audit all NDPBs.
To return to Gladstone, the Government now have a once-in-a-century opportunity to modernise the public audit process. The Government Resources and Accounts Bill, which will give effect to resource accounting and budgeting, will substantially amend the founding legislation of the Comptroller and Auditor General's audit, but the Treasury has not yet seized the opportunity that the change presents. I shall therefore be pressing for that to be put right. In 11 of the 40 reports before the House today, the solution offered by the Treasury involves, in one respect or another, the move to resource accounting. The points that I shall now make apply directly to those reports as well as the overall position.
The Government must provide the Comptroller and Auditor General with the statutory access to documents, information and explanations that he needs to undertake


his work on behalf of Parliament. Even where the evidence is held by third parties—for example, those contracting with public bodies—and by organisations carrying out public functions under authorisation from Government or Parliament, it cannot be right that the Comptroller and Auditor General wastes valuable time and effort arguing for access on a case-by-case basis, subject to a Department's whim. Those frustrations extend even to the Committee.
We asked for the Comptroller and Auditor General to be given access to documents held by Oflot about the financial integrity of applicants to run the lottery. We first asked the Government to arrange that in March 1998. Subsequently, two members of the Committee had a meeting with the Secretary of State for Culture, Media and Sport, and we still await a decision. Frankly, that is not good enough.
The Government must ensure that the Comptroller and Auditor General is automatically the auditor of every non-departmental public body. The Government have conceded the principle and must take this opportunity to put it into practice. At present, more than 50 NDPBs, spending around £3 billion provided by Parliament, are not subject to his audit. The Housing Corporation, for example, spends more than £1 billion a year. Changes to the way in which government works have put large amounts of expenditure outside the departmental boundary. Managerial changes should not be allowed arbitrarily to remove expenditure from automatic parliamentary scrutiny. I hope that the forthcoming Bill will correct that.
The Government must enable the Comptroller and Auditor General to audit limited companies established by central Government bodies. Hon. Members may be surprised to learn that there are well over 200 such companies, receiving between £2 billion and £3 billion of public funding every year. The choice of vehicle through which the Government deliver an aspect of public policy and service should not determine the parliamentary scrutiny that it receives.
The Government must provide properly for the audit of any extension of resource accounts to include wider aspects of the public sector, as they have said may be their ultimate intention. The forthcoming legislation should give the Comptroller and Auditor General access along the lines of provisions in companies legislation to bodies whose accounts are consolidated into the wider whole of Government accounts that the Comptroller and Auditor General is required to examine.
The Government's proposals to change the basis for supply and the way in which Departments will be held accountable to Parliament should not be brought into force until it is clear that the new system is better than the one that it is intended to replace. I seek an undertaking from the Government that the relevant sections of resource accounting will not be implemented until the Committee has signified its satisfaction and the Government have provided us with assurances that all Departments are fully prepared for the change.

Mr. Geraint Davies: Does the right hon. Gentleman believe that the work of the Audit Commission should be accountable to a Select Committee

of this House, be it the Public Accounts Committee or the Environment Sub-Committee, in the way that the NAO answers to the PAC?

Mr. Davis: That is not what I am getting at, although it would be a worthwhile reform. I would not want to make the Audit Commission accountable to the Public Accounts Committee, unless the hon. Gentleman wants to turn up to 100 meetings a year rather than 50, as we have now, but it would be valuable to have a second PAC to deal with the output from the Audit Commission and hold the Government to account on it. I hope that the hon. Gentleman pursues that worthwhile idea, but it is not the point that I was making.

Mr. Dalyell: I do not want to interrupt the flow of the right hon. Gentleman's interesting and informative speech. Has the Committee had any difficulty with bodies in Scotland and the Scottish Executive?

Mr. Davis: The hon. Gentleman tempts me enormously.

Mr. Dalyell: Succumb to the temptation.

Mr. Davis: I try never to succumb to temptation. The purpose of my Committee is to prevent people from doing that. Like the hon. Gentleman, I am concerned about that large tranche of money—£14 billion, or however much it is—that is spent on grant from this Parliament to Scotland. We have attempted to create an audit committee in Scotland that is equivalent to the PAC. I am attempting to make sure that it is able to learn from our experience. However, that does not deal with the hon. Gentleman's point, which is that accountability to this Parliament for that £14 billion has been sheared off and dislocated as a result of last year's devolution legislation, but that was a decision of this House. He and I both have to live with it, whether we like it or not.
My final point, on which I shall talk only briefly, is incredibly important. The Government have not addressed the audit of performance measures.

Sir Robert Smith: A small amount of the Scottish block is spent by the Secretary of State for Scotland. Is the use to which that money is put still accountable to the right hon. Gentleman's Committee?

Mr. Davis: The permanent secretary to the Scottish Office is responsible for the entire £14 billion. It is possible to summon him to account for the use of all of it, but the difficulty is that the National Audit Office is unable to penetrate behind that 14 billion to inform the Committee about its use. One of the virtues of the Public Accounts Committee is that it is non-partisan in its findings. One reason why it can be so non-partisan is that it has a strong factual basis for every decision or recommendation. It is hard to dispute party points when the facts of misdemeanour, waste, misuse, inefficiency or lack of service delivery are staring people in the face. That is what we lack for the Scottish money. We can still summon the permanent secretary, but we do not have the vital weapon that we have with every other aspect of public accounting in this country.
As I said, the Government have not addressed the audit of performance measures. The Government's proposed resource accounting reforms will require the annual preparation of statements of performance. They may well be the most important component of the reforms. Despite a long campaign by the Public Accounts Committee, the Government have not yet decided whether they will be independently audited. The Select Committee on the Treasury reported in July this year on the need for external validation of performance measures and concluded that the National Audit Office would be the best body to do that. The Government's response is disappointing. Performance measurement has tremendous potential to serve as a lever to improve the delivery of public services and to increase the openness and transparency to Parliament and to the citizen of what the Government have done on their behalf. However, all Governments will have to resist the temptation to manipulate performance information. That temptation applies to every Minister in every Department in every Government of whom I have had experience. Independent validation is an essential protection in that respect.
The Government must accept that there is a stark parallel. Local government is properly being subjected to a rigorous, independently audited performance measurement regime—the so-called best value regime. We are told that poor performers will be named and shamed and publicly exposed. The Government are rightly spending millions of pounds on equipping the Audit Commission to carry out that role, yet the same strictures are deemed inappropriate for central Government. Why? The Government's failure to allow the NAO to carry out for central Government the role that its counterparts will carry out for local government is beyond comprehension. Hard facts and truthful data are the currency of debate in any democracy. It is vital that they are not debased in any way.
There have been controversies in recent months over the treatment of a wide variety of information, from tax burdens to waiting lists. I shall not get involved in those controversies today, but I want to prevent them from happening. It is vital that the public have absolute confidence in Government information, be it on hospital waiting lists, tax burdens or any other matter.
The Comptroller and Auditor General and his staff have been developing methods for validating performance measures. The Bill that the Government will shortly introduce should allow the House to benefit from that expertise through routine reporting on performance measurement as part of the examination of public accounts. That would be consistent with the National Audit Act 1983, which deals with efficiency and effectiveness in the delivery of public services.
As we enter the next century, the Government should recognise that they have a unique opportunity to emulate one of the greatest successes of the last century. I have no compunction as a Conservative in recognising that it was a success brought about by a great Liberal Prime Minister. It might seem rash, but a Government truly seized by reforming zeal would update not just the process of government, but the public accountability system that is its cornerstone. Gladstone's contemporaries 130 years ago might have thought him mad to establish an auditor that the Government could not sack, to put the whole of

the Government, as they were then, within his remit and—maddest of all, dare I say—to create a Public Accounts Committee chaired by an Opposition Member. What might have been seen as madness at the time has been seen subsequently as his most visionary action. The Government must be equally visionary this year.
I fully understand that what I am proposing would not yield short-term political profit for the Government. If they set out to modernise rather than marginalise Parliament, they will make their own political job a little harder. However, if they grasp the opportunity and have the courage to recognise that strong democracy generates good government, we shall all have reason to applaud their actions.

Mr. Alan Williams: At the start of his speech, the right hon. Member for Haltemprice and Howden (Mr. Davis) said that the House was packed. Look around and see what he has done. I greatly respect his chairmanship, but he should have learned a lesson from the fact that two previous Financial Secretaries could not stand coming here again.
I shall echo the right hon. Gentleman's approach, in that rather than giving a nut-and-bolt, step-by-step résumé of the year, I shall try to put our activities in a broader perspective because this is a singularly appropriate time to do so. In a recent, equally well attended debate on Select Committee leaks, I noted that Britain prides itself on its democracy but is under an enormous illusion in that belief. The ordinary citizens' participation in parliamentary democracy, if they lived to 80, would be a mere 20 votes. What is democracy and where do we find it? In a representative democracy, the answer must be here in this building or not at all. It is to be found here in this Chamber, but even more in our Committees. Although much of what we do is pedestrian by nature, it does not alter the fact that it is fundamental to the preservation of a working, meaningful democracy. If the Executive are not made continuously accountable, democracy will cease to exist.
The year before last, a retiring permanent secretary said that the Public Accounts Committee should not be confrontational or about blame. From his perspective, I understand that that might be an uncomfortable scenario, but his statement showed a lack of understanding of the Committee's role and nature. As its Chairman said, it was set up 130 years ago at a time of corruption, sleaze and waste. That may prompt some to ask whether was it worth it, but it is not appropriate to ask so facile a question. We should recognise that waste, inefficiency and impropriety are not to be fought as individual battles but as part of an on-going campaign to suppress and restrain them. Human nature being what it is, we cannot get rid of them but only try to contain them.
The sheer scale of what our one Committee is trying to do is rarely understood in its democratic context outside the House. Fifteen of us try to monitor more than £300 billion of public expenditure. When we were set up 130 years ago, there were only a couple of Departments to monitor, so a small Committee was appropriate. Now more than 4,000 accounting units spend the £300 billion. We meet only 50 times a year. Hon. Members will confirm that meeting twice a week, as we do when Parliament is sitting, with each report being different and


consisting of 70 pages of briefing, is quite an onerous responsibility. However diligent the 15 of us may like to think we are, the PAC can only scratch the surface.
Returning to the permanent secretary who thought that the Committee was confrontational and involved with blame, I ask anyone to consider, with 4,000 subjects of possible examination, whether we should take them in turn or try to prioritise them. If we are to prioritise them, should we not pick those where there are lessons to learn? It may not be a matter of blame. The more innovative the subject being considered, the more essential its scrutiny so that any problems are rooted out as early as possible.
Sometimes our work is frustrating. We revealed the problems of computerisation, but they continue to appear. We deal with the dangers involved in varying costs and the problems of conflicts of interest. However, we could do those things in only the most token way if it were not for the National Audit Office. I do not say that to pander to the NAO, whose work we all respect. It has some shortcomings, but also enormous achievements. A Committee of 15 hon. Members, with constituents to look after and responsibilities imposed by the Whips, cannot pretend to monitor at all effectively what the Government are doing without the work of the NAO. There is nothing like a spell in opposition to make one understand the value of such monitoring. It is a measure of the scale of the task synthesised for us that it takes 750 staff to enable the NAO to do the monitoring that it undertakes on our behalf and to prepare reports. I emphasise to the Minister, because the whole Committee will return to this, that the NAO can do its work only if it has, and continues to have, appropriate access to each of the 4,000 units.
The NAO and the Comptroller and Auditor General must remain independent. In fairness, in recent years they have been made increasingly independent. However, their accountability and reports must be to Parliament and our Committee and not, as has been mooted in some quarters, to the Treasury. It would be ludicrous to have the monitor of the Executive reporting to the Executive. They do that sort of thing in Moscow, and we have seen the results there.
I am not opposed to change. Indeed, I have been a great advocate of changes. As a Committee member, I am concerned only that when they happen, we are prepared to deal with the consequences. The whole House, and Ministers in particular, have a responsibility there. There have been changes in the structure of Government that make accountability more elusive. I mentioned fragmentation and the 4,000 units that we try to monitor. Yesterday, the report of the Select Committee on Public Administration noted that there were more than 1,000 non-departmental Government bodies and various task forces. We are now told that the NHS Executive will be divided into more than 600 different accounting units. We are in a dynamic stage, with experimentation in the structure of government and in the way in which we deal with the people who are deemed to be appropriate to make up the Executive. I am not making any value judgments about the desirability of those developments. They have happened and I am observing the consequences.
Civil servants have increasingly had to become accustomed to short-term contracts. Such contracts, by their very nature, have the potential to diminish the loyalty of civil servants, and they certainly diminish their

experience, and the ethical and financial codes that apply in the civil service. If that is the way in which things are to go, so be it, but we should monitor the consequences.
As for entrepreneurial activity in government, I was a Minister in the Department of Industry way back in the 1970s, and in the Department of Economic Affairs in the 1960s. We always sought cross-fertilisation of ideas between the civil service and private industry to get the best for the public service. People find it frustrating if they come into the civil service and are given chief executive positions but have no background in the public ethic and no experience of the public approach to taxpayers' money.
One lunch hour, I sat in the cafeteria with a Minister—I would never dream of revealing his name or which party he was in, but I have been back on the Committee since 1990, so he could have been in either Administration. He told me, "I hope you realise that your Committee is costing my Department money. We are spending good money to employ business men, and they are telling us that they are afraid to do things in the way that they want to because they are afraid of the Public Accounts Committee." They have reason to be afraid only if they do not observe the rules. Business men have incredible freedom to ignore their shareholders, but the taxpayer cannot be ignored. Parliament cannot afford to allow the taxpayer to be ignored.

Mr. David Davis: I am listening to the right hon. Gentleman with fascination. I have worked in business, and one of the misapprehensions of the public sector is that businesses are loose, slack or unethical with the use of money. In truth, the controls in business are often much tighter than in the public sector. I think that that is in part because the public sector rests, quite reasonably, on the integrity and altruism of the people who work in it. Does the right hon. Gentleman accept that when people are taken out of a controlled environment and put into one that assumes a level of integrity and altruism, that of itself creates a problem?

Mr. Williams: Yes, of course. We agree that there is a problem, and we must address it. It may have been before the right hon. Gentleman's time as Chairman, but after a debacle involving a chief executive of a quango I advocated that all new chief executives should be required to attend a civil service college initiation course, so that they were not thrown in at the deep end.
Our dearly beloved colleagues in the Treasury covered their backs by supplying people with a bunch of notes on what they should and should not do, and the relevant Department also covered its back against the Committee and the Treasury by supplying another set of notes. People were pitched into the job and were not given any time to read the notes, and the Department was surprised when they did not observe the rules. We have now tried to address the problem. The key difficulty is not with the personnel, but with the structures that are being considered.
The changes are making the money trail more difficult to follow. It is not just that there are too many of them, but that a trail is often cut off and a fence is put across it. Therefore, accountability is blurred and diminished. It does not matter whether we are for or against privatisation and contractorisation. It is interesting that in local government the Audit Commission is allowed to follow


public money wherever it goes, but at governmental level where there are much larger budgets, the National Audit Office does not have that power. Every act of privatisation or contractorisation diminishes the area that the NAO can investigate, but it is still the taxpayers' money. In diminishing what the NAO can examine, it diminishes what the PAC and the House of Commons can examine.
Like my friend, the right hon. Member for Haltemprice and Howden—we are personal friends even if we are political adversaries, and our Committee is non-political because it is factual, which is one of the joys of serving on it—I am most concerned about this problem, and I cannot emphasis that too strongly to the Financial Secretary. I know, however, that he has not had a chance to immerse himself in the subject. Richard Crossman used to say that it takes six months to read one's way into a new job, and that is probably about right if it is a subject that a Minister has not dealt with before. The Government should make their changes—that is a policy decision—but they should ensure that the powers of the NAO and the PAC are adequately amended to cope with those changes. It is not just a matter of nut-and-bolt auditing, but about accountability and whether this is a democratic institution.

Mr. Dalyell: May I be forgiven a reminiscence as Richard Crossman's Parliamentary Private Secretary? That formidable and, in my view, excellent permanent secretary at the Ministry of Housing and Local Government, Dame Evelyn Sharp, used the PAC to pursue her own policies against those of the Minister. I am sure that that does not happen these days.

Mr. Williams: Having known the Minister and his determination to get his own way, I can well understand why Dame Evelyn may have been so tempted.
The Chairman gave a list, which I shall not repeat, but I shall touch on two items mentioned. The report of the Select Committee on Public Administration, which was published only yesterday, emphasised that the Comptroller and Auditor General should be given the power to audit all—not just some—executive non-departmental governmental bodies.
The other item concerns an innovative, controversial policy—perhaps it is less controversial to some than it is to others. The body that is to be established to carry on public-private partnership business will be involved with massive sums of public money. It will also commit Government for a long time—a 30-year commitment on the average project. It is imperative that something as new and innovative as PPP, and with so many potential pitfalls—potential opportunities, as Governments would see it—should be monitored properly and thoroughly. That can be done only by the PAC and the National Audit Office, and I am sure that we shall have further discussions with my hon. Friend the Financial Secretary and his ministerial colleagues.
I apologise for speaking for so long, but I want to make another point emphatically. I am increasingly irritated by a factor to which the Chairman of the Committee himself referred. By its very nature, the Committee is retrospective, in that the event involved has to have happened, the National Audit Office has to have

discovered and investigated it, the NAO has to have reported to us, and we have to have had a hearing. A year or 18 months can pass between an impropriety, or even a minor mistake, and our hearing about it.
One of the most galling consequences for us is that, invariably, the more serious the case, the less likely we are to see before us the accounting officer who was accountable at the time. There is a noticeable incidence of premature retirement as a result of, for instance, the onset of severe backache, which seems to correlate directly with the severity of the NAO report.
The Committee has reached the unanimous view that retirement, or moving to a different Department, does not exonerate a civil servant from his duty to answer for that for which he was paid.

Mr. Richard Page: I empathise with the right hon. Gentleman's request. Does he think that it is worth asking the NAO to carry out a statistical audit to establish whether more accounting officers move, or retire, when they are due to appear before the Committee, as against normal movement within the civil service?

Mr. Williams: During the previous Parliament, I engaged in a little experiment. In May, we organised a hearing involving a certain health authority. We decided to call back from retirement the man who had chaired the authority when the problem had arisen. During the hearing, I asked Sir James—the chairman involved—when he had first learned of the date on which the authority would first appear before the PAC. He replied, "Two weeks before Christmas." I then asked, "When did you resign?" He said, "One week before Christmas."

Mr. David Rendel: I am delighted to take part in the debate. Let me begin by apologising to the House. I have already written to Madam Speaker, to the Committee Chairman and to the Financial Secretary to the Treasury, explaining that unfortunately, owing to a prior engagement, I shall have to leave the Chamber at about 5 pm, and consequently will be unlikely to hear the end of the debate. I am particularly sorry that I shall miss the Financial Secretary's response to the debate—unless all those who wish to speak after me speed up their remarks considerably, in which event I may still have a chance to hear his speech. I hope that I shall.
I am pleased that my name is attached to the motion. It is a great honour, as I am the newest member of the Committee. I have attended only one sitting so far, and have attended none of the sittings to which the reports that we are discussing relate. In a way, therefore, I feel something of a fraud today, but I am, as I said, delighted to speak in the debate. I was particularly pleased by what the Committee Chairman said about the work done by my predecessor as a Liberal Democrat Committee member, my right hon. Friend the Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan). He served on the Committee for a long time, and I am sure that he will enjoy reading the Chairman's comments in Hansard.
Although I was not a member of the Committee during the time to which the reports refer, I have had the opportunity to make use of a number of PAC reports in the past. Some proved excellent and valuable, especially


those relating to the Child Support Agency and the national insurance recording system. In the last Session, last January, I spoke in the debate equivalent to this about the PAC's first report on NIRS. It is, perhaps, something of a coincidence that the Financial Secretary should, like me, have moved from the issue of social security, with which a number of the reports were so concerned, to his present duties.
Over the past year—since I spoke about NIRS—a number of other major failures in the Government's computer projects have come to light. A series of large-scale projects have come to grief in one way or another, including—importantly—the project to re-computerise the passport system in the Home Office, which had such dramatic results last summer. In the Department of Social Security, there was not just NIRS but the benefit automation project, which was intended to automate the system for benefit transfers and to help local post offices. Both those arrangements went badly wrong.
In both instances, because such large Government computer systems were involved, a large number of people were involved—millions, in some instances. We are talking not just about those who are comparatively well off and can do something about it, but about many of our constituents who are not at all well off. Such people find it difficult to deal with Government bodies at the best of times, and are hopelessly confused and unable to respond appropriately when a major computing system goes badly wrong.
I want to concentrate on NIRS2, because it strikes me as a good example of what has gone wrong, and I feel that it may be possible to draw some conclusions from the Government's failure to deal with it adequately. I refer particularly to the Committee's twenty-second report, produced in the last Session.
The problem is that NIRS2 was allowed to go "live" before it had been thoroughly tested. I appreciate the Government's difficulties: the system was set up under the previous Government, and owing to various changes that had been made, it was inevitable that we should have a new computer system to record national insurance payments. The Government were in a difficult position, in that they had to get the new system going, but the previous Government had failed to appreciate the time scale that would be needed for the introduction of a new system. That meant that NIRS2 had to be introduced before it had been tested and debugged, and before all the necessary corrections had been made. As a result, not unexpectedly—at least, it should not have been unexpected—the system collapsed, and all new and repeat claims for contribution-based retirement pension, job seekers allowance, incapacity benefit and related housing and council tax benefits were for a while paid "blind", on the basis of what the individuals concerned said were their records, rather than what the Government had recorded. That obviously caused many difficulties. It caused the possibility of errors in payments—overpayments as well as underpayments—in the case of people who could ill afford such errors.
The present Government, rather than the previous one, are surely to blame for the fact that, for many months after the story broke in August 1998, DSS Ministers underplayed the scale of the problem. They simply did not realise how big it was. They failed to warn people of the likely effect. They claimed that they would be able to deal with it fairly quickly and easily, but it eventually

became obvious that that was not the case, and that the delays would have severe effects. When we debated the subject in January it was made clear that, even after the publication of the PAC's initial report, the Department had failed to inform the PAC that the situation was not only continuing but had worsened, and the PAC was rightly angry about that.
Had it not been for the PAC's reports, many members of the public and officials might still have been in the dark about the extent of the problem and the difficulties that they might meet, and so might not have been able to help some people to overcome the difficulties that they would face as a result of a systems failure.
In some cases, those difficulties amounted to what might seem to be comparatively small underpayments or overpayments of £1.25 a week, but in other cases, involving SERPS payments or private pension payments, they could have amounted to as much as £100 a week. That is clearly a significant sum, but even the much smaller sums may be significant to those living on a state retirement pension with no other form of benefit, whose income is therefore restricted, and who are living hand to mouth, as, sadly, those who live on the most basic benefits have to do.
As the Chairman said, one of the great difficulties was many people's fear that they had been overpaid. Many who were not overpaid feared that they had been overpaid and so felt unable to use all the benefits that they were given, putting them to one side in case they were later called on to return them to the state.
The Government's difficulty was that, by failing to register the size of the problem and the difficulty that they faced in rectifying it, they led people to believe that the problem would be over by a certain date, but that date changed time and again. As a result, people did not know where they stood.
The most important thing is that the Government should take on board the lessons to be learned from the PAC reports and others. Lessons must be learned from not only the NIRS2 system but all the other IT systems that have gone wrong to ensure that such things do not happen again. We will need massive IT projects, so we must ensure that the Government are running good IT systems. Some of them will be large for the very good reason that there are many millions of people in Britain, all of whom may have different requirements.

Mr. John Bercow: Before the hon. Gentleman moves on to the lessons that we might usefully draw, does he agree that computer inadequacy is also the principal reason why the Department for Education and Employment has been obliged to tell us that approximately 50,000 young people have left the new deal to proceed to what it euphemistically calls "destinations unknown"?

Mr. Rendel: I am sure that the hon. Gentleman knows a lot more about that than I do, and if he claims that that is right, I have no reason to suppose that it is not, but it is certainly not a subject that I know enough about to confirm to the House that he is right. He may have a chance to catch your eye, Mr. Deputy Speaker, and to say more about that later.
We need to consider how such projects are conceived and what they are meant to do. In future, the Government must consider more carefully how the programmes will


be used, how people will be able to handle them, and the real requirements of the end users. The Government's needs may be taken into account, but sometimes the end users—the benefit recipients—are not sufficiently taken into account.
A further point concerns contingency plans. The very fact that such programmes are necessarily large and complex means that, almost invariably, they will go wrong, particularly when they are first introduced. That means that those who operate the systems must have enough time to get them up and running properly and to iron out all possible initial difficulties alongside the old system.
There must also be a contingency plan for dealing with problems after the introduction of the new system. It was the lack of a proper contingency system that caused such enormous problems when NIRS2 was introduced; there was no way of returning to the old system when the new system was introduced, causing many further and, to my mind, unnecessary problems. We must ensure that services can continue to be delivered to our fellow citizens whatever happens to a new computer system.
Many of the new large systems will be introduced under the private finance initiative, whichever party is in power, even when my party takes over in government—[Interruption.] Some of us think long term, even if most do not.
It is important to recognise that the whole point of introducing such systems under the PFI is to transfer some of the risk and its cost to the private sector. When such systems are introduced they are necessary. With regard to NIRS2, only a small amount of compensation has been paid by Andersen Consulting, which produced the system, because once it started going wrong the Government were over a barrel. In effect, they were told, "You need us to make sure that it works in future, so if you start demanding compensation we will back out and leave you in a hopeless situation." The Government were, in effect, almost blackmailed, so they allowed the company to try to iron out the problems without its having to pay a lot of compensation.
Therefore, the risk that the Government thought they had transferred to the private sector was not so transferred at all and, in effect, the taxpayer has had to pay for all the problems. If we are to continue to use the PFI, we must recognise that difficulty. We must recognise that, once such massive projects are under way, it is hard to change the contractor running them, giving them a great hold over the customer. In such a situation, it is hard to see how the risk can be transferred. That is a problem that the Government have not answered. I do not pretend that I have an answer to it, but it is something that needs to be worked out. If the PH is to work properly, we need to find a way of genuinely transferring the risk to the private sector.
There must be better ways of handling such big projects. In so many big projects the Government systematically fail to ensure that they work properly and that, when things go wrong, the costs do not fall on the public sector. There must be better ways of handling such projects. I can only suggest that it would be a good start for the Government to pay careful attention to the PAC's reports and to see whether they can learn some lessons,

which will enable us to avoid some of the horrific problems that we have had with computer systems such as NIRS2.

Mr. Gerry Steinberg: This is the first time I have participated in one of these debates, and I shall be brief. I shall certainly be briefer than the Chairman was. It is a pity that he is no longer present because I wanted to remind him of how long he spoke this afternoon and how little time he gives me in Committee. If he returns, I shall do so.
First, I pay tribute to the Committee staff. I have read past debates, and paying tribute to staff is a convention, but I do so sincerely. The staff are excellent; they keep us supplied with the briefs and papers that we need. The right hon. Member for Haltemprice and Howden (Mr. Davis) has returned to the Chamber. Earlier, I told that House that I intended to be much briefer than the right hon. Gentleman in view of the amount of time that he grants me in PAC meetings.

Mr. David Davis: My entire speech probably did not make up for the hon. Gentleman's overruns this year.

Mr. Steinberg: We shall not continue the argument.
I pay tribute to the National Audit Office, without which the PAC could not survive. Indeed, we would not exist without it; it does an excellent job.
I have been a member of the PAC for just over a year. It has been one of the most enjoyable experiences that I have had since coming to Westminster 12 years ago. Whitehall needs to be kept on its toes, and the PAC does that. One of the most incredible aspects of interrogation in the PAC is the complacency that some senior civil servants demonstrate. I sometimes despair when billions of pounds have been wasted and senior civil servants remain complacent about it. Perhaps they object to being questioned by, in my case, a minor Back Bencher. The PAC thus has a vital role to play. The Committee is well controlled by the right hon. Member for Haltemprice and Howden. He is a fair man who does a good job, although I am convinced that he gives me less time than anybody else.
It is the Committee's strict convention to be non-political. That convention is well respected, although it has been difficult to be non-political in the past year—I have been brought into line on several occasions. However, I suspect that it will become easier to be non-political as time goes on and we consider reports from this Government rather than those of the previous Administration.
Today presents an opportunity for a more open debate, which is welcome. This afternoon, we can express opinions that we cannot present in Committee because of the convention that I mentioned. I shall not philosophise like my right hon. Friend the Member for Swansea, West (Mr. Williams) and the right hon. Member for Haltemprice and Howden; I shall be a little more blunt.
I believed that we could discuss approximately 40 reports today, and the right hon. Member for Haltemprice and Howden said that the number was indeed 40. However, I want to concentrate on the two reports that I found the most interesting and, politically, the most


controversial. I want to discuss the reports on the two privatizations—of British Energy and Railtrack—that the previous Government undertook. I believe that the previous Government proceeded with them purely for reasons of dogma. My argument this afternoon will clearly demonstrate that.
Let us consider British Energy. The PAC's report examined whether the Department of Trade and Industry took reasonable steps to minimise taxpayers' financial exposure to nuclear liabilities, and whether it maximised the proceeds obtained from shares. Not long after I first entered the House in 1989, the then Prime Minister made it clear that she would not touch the privatisation of British Energy with a bargepole. Yet in 1995, the previous Government went ahead with the sale. Initially, the sale of shares was a flop, and many remained unsold—indeed, only 88.5 per cent. were sold. The sale raised approximately £1.26 billion at a time when British Energy owed the Treasury £600 million. A simple sum shows the amount of money that the sale of shares raised. The remaining shares were sold later—not by design, but because they could not be sold initially. That extra sale raised £198 million. The total raised was due to good luck rather than good management.
The eight most modern nuclear power stations were sold while the older stations were retained in the public sector. The older nuclear power stations are nearing the end of their useful lives and will soon need to be decommissioned. The sale ultimately raised approximately £1.5 billion, yet it was hoped that it would raise £3.7 billion. So the loss to the taxpayer was enormous; one does not have to be a mathematician to work it out.
The original construction of Sizewell B, one of the power stations that was sold, cost approximately £3 billion. I would have expected the privatisation to raise at least the original capital costs of the eight power stations that were sold. Yet the sale fell well short of the cost of one power station. To make matters a darn sight worse, the Treasury had expected to receive from the nuclear industry approximately £560 million in 1996–97 and £1.12 billion in 1997–98. Yet after privatisation, the industry cost the taxpayer £950 million over the same period. That is not a good deal.
After privatisation, the nuclear industry changed from an income-generating industry into a revenue drain. It now costs the taxpayer more to run the nuclear industry in the form of British Nuclear Fuels plc because it no longer controls profit-making modern stations. To make matters worse, the taxpayer will have to pay for decommissioning the older magnox power stations without the benefit of any revenue from the modern stations. Again, that is not a good deal for the taxpayer. The decommissioning will cost approximately £8 billion. Even worse, the privatised industry will be expected to make a contribution of only £16 million towards paying for long-term liabilities of nearly £15 billion. Clearly, that privatisation was an absolute failure that caused a huge loss to the taxpayer.
The PAC concluded that the nature of nuclear liabilities caused inevitable uncertainties, especially in the long term, about British Energy's ability to finance them and that, therefore, the Government should monitor carefully the company's on-going ability to meet its liabilities without recourse to the taxpayer. The Committee also

concluded that the taxpayer was still open to financial liability for British Energy's nuclear power stations. Those financial liabilities arise from several causes.
First, British Energy has a fixed-price contract for fuel reprocessing with British Nuclear Fuels plc, which is still publicly owned. Secondly, there is currently no technology for the disposal of nuclear waste in the United Kingdom. Thirdly, there is a residual risk that, in the long term, neither the trust fund that was set up, nor British Energy, will be able to finance the full cost of nuclear decommissioning. For those reasons, it is my view that that sale should never have gone ahead—there are too many doubts regarding an industry that must, at all times, have safety as its paramount consideration.
When the Department of Transport privatised Railtrack in 1996, it sold all the shares at one time, for £3.90 each, through a stock market flotation that raised about £1.9 billion. About two years later, when the NAO wrote its report, those shares had risen in value to £16 each. The report clearly states that one of the aims of the sale was to get a good deal for the taxpayer. Although that was a simple aim and £1.9 billion was raised, Railtrack was worth £8 billion two years later. Quite contrary to the stated aim, the deal was dreadful: the British taxpayer and the Treasury lost a fortune and the company was sold off for about £6 billion less than it was worth. That money could have gone into Treasury coffers to be used in health or education or to build hospitals. Quite obviously, the policy was to sell at all costs.
The situation was made worse because, as a result of previous privatisations, the Department should have known what to expect. It was clear that selling shares in stages had produced substantial increased proceeds: the price rose over time and became higher than that achieved when all the shares were sold at the initial issue price. Two examples come to mind: the sales of National Power and PowerGen by the Department of Energy. The shares were sold in two stages and, as a consequence, the overall proceeds from the two sales were £2.3 billion higher than they would have been if 100 per cent. of the shares had been sold initially.
At the time, the Department of Energy set out its reason for adopting the phased sale strategy in great detail and circulated the information widely throughout Departments so that its experience could be of benefit during future privatisations. Did the Ministry of Transport take any notice of the information that was given it? No. The information and advice that the Department of Energy had passed on to all Departments were ignored and the Ministry of Transport lost billions of pounds for the taxpayer. In my view, that is a scandal. However, when the PAC questioned the chief accounting officer on those issues, the response was quite complacent. It did not even seem to have been accepted that what had happened was anywhere near a scandal.
The NAO report states that a 100 per cent. sale was decided on because of the Treasury's concern about the impact of a partial sale on the confidence of investors in the light of the approaching general election. If that was the case, it is clear to me that the policy was to sell at all costs. Political dogma, if I dare say that again, overrode the financial consequences of the privatisation. What can only be described as an astronomical increase in share


values over the past few years has occurred simply because Railtrack was completely undervalued. It certainly has not improved because of its track record.

Mr. David Davis: Ouch!

Mr. Steinberg: It is also claimed that, because Railtrack was sold in such a hurry, the interim regulation scheme was also overgenerous and excessively costly to the taxpayer. As a consequence, total rail subsidies have doubled compared with the aid received by British Rail, which originally ran the system. To quote from the NAO report, the value of shares also increased because the market realised that Railtrack could
secure significant efficiencies on operating costs, particularly infrastructure maintenance expenditure and investment".
In other words, Railtrack was highly valued because people knew that it would make cuts. We have seen what happens when such cuts are made. The taxpayer was ripped off by the sale of Railtrack and the traveller now receives a declining service from it. I do not want to go into its record, but it is clear to everybody that there is a great deal of worry in respect of safety on the railways, basically because of lack of investment.
Who has made a lot of money out of these privatisations? Certainly not the taxpayer. Investors have achieved huge returns on their investment, all at the expense of the British taxpayer. At the time, Railtrack was also given, on a plate, billions of pounds of investment land, which was hardly noticed—the measure just went through and people did not realise what had happened. To my mind, the two privatisations, which the PAC studied in great detail, were done for no reason other than dogma. Both sales were bad for the taxpayer. They cost the Government billions of pounds and have created severe problems for the future. They have given little benefit to the taxpayer, if any, but investors have done very nicely, thank you.
The previous Government's declared policy was to deepen and widen share ownership, but the sale of Railtrack in particular was aimed at deepening rather than widening. The emphasis of that sale was on those who already owned shares adding Railtrack to their portfolio, rather than trying to persuade people who had never owned shares to buy them. The policy was to sell at all costs—sell and be damned—and that allowed large institutions to get their hands on the huge Railtrack profits.
In both privatisations, the PAC was concerned that the Department chose not to stagger the sale of shares. In both privatisations, believe it or not, the cost of consultants and advisers was absolutely astronomical. The obsession with privatising nuclear power generation meant that management and financial consultants alone cost £25 million. In the privatisation of Railtrack, consultants and advisers cost £39 million. Astronomical sums were paid for advice that, on reflection, appears to have been badly wrong and has contributed to a bill for the taxpayers amounting to millions of pounds.
We all have our opinions about the consequences of the two privatisations and why they were carried out in such a way, but I do not think that anybody who read the reports and listened to the evidence could argue against

the idea that, in both cases, the taxpayer was ripped off. I am delighted that the Treasury accepts the PAC recommendations that, in any future sales, Departments should consider negotiating a clawback on unanticipated increases in the profitability of companies and that, in any future flotation, Departments should start from a presumption in favour of a phased sale. If that is not possible, there should be safeguards to protect the taxpayers' interests. Those recommendations are very sensible. What a pity that they were not in place when Railtrack and British Energy were privatised. If they had been, vast sums of money that could have been used for other purposes would not have been squandered.

Mr. Charles Wardle: I shall not, on this occasion, follow the hon. Member for City of Durham (Mr. Steinberg) and make overtly political comments. I agree with the right hon. Member for Swansea, West (Mr. Williams) that the purpose of the Public Accounts Committee is to measure and assess performance by officials rather than to look at policy, as other Select Committees do.
After making that unkind jibe, I should add that it is a pleasure otherwise to follow the hon. Member for City of Durham, who has in Committee a deceptively avuncular style that lulls witnesses into complacency when he goes for the jugular, as he is able to do very effectively.
The hon. Gentleman was also responsible for the one bright moment on the Committee's recent trip to Brussels and Luxembourg. After a particularly tedious—not to say frustrating, even depressing—day of evidence from people who did not seem to understand what financial controls really meant in the northern European sense, and when the entire Committee was feeling down, the hon. Gentleman announced that it was his birthday. There were, therefore, some very vigorous Euro-celebrations, which I am pleased to tell the House were paid for not by the European Commission, but by Committee members.
I offer an advance apology to you, Mr. Deputy Speaker, to the Minister and to the House for planning not to be in the Chamber for the debate's conclusion. I mean no discourtesy, but well before I knew the date of today's debate, I had made arrangements to attend a function in my constituency. I wrote to Madam Speaker to explain my predicament.
I follow my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) and other hon. Members who have commended the National Audit Office and our excellent Committee Clerk on the quality of the material that provides the basis of the Committee's evidence taking and subsequent reports. I am sure that all hon. Members will agree that the thoroughness and incisiveness of the case load we receive is exemplary.
Before turning to deal with a few specific reports, I repeat the calls that have been rehearsed today, and which I and other hon. Members made last year, for an extension of the Comptroller and Auditor General's remit to give him access—for audit purposes and to measure value-for-money performance—to spheres of public expenditure that he currently cannot examine. Despite the Committee's recommendations in the past year, not enough progress on that front seems yet to have been achieved.
I know that there will be an opportunity to raise those issues when the Government's Resources and Accounts Bill is considered on Second Reading, but I add my voice


now to those pointing out that the CAG should have access to the books of private contractors and voluntary boards when taxpayers' money is spent. He should have access to the accounts of non-departmental public bodies and to the books of limited companies established by central Government bodies, as well as to bodies established to participate in public-private partnership business.
Before dealing with specific reports, I should also like to praise the work done by the National Audit Office, and within the Treasury itself, to enable Whitehall to switch to resource accounting. I have said on many other occasions that resource accounting will provide a framework of management controls that will help to modernise Whitehall and empower not only the middle management ranks of the civil service, but those in senior positions. I wish every Department well with that important challenge.
I should like briefly to draw the House's attention to four reports, the first of which is the sixteenth, "National Savings: Developments in Financial Reporting". Two and a half years ago, the Committee reported that the number and size of discrepancies and unreconciled balances in the National Savings accounting systems was unacceptable, and pointed to a failure to apply basic accounting principles and to a serious risk of fraud. It was clear that the past management of National Savings had very little sense of urgency about financial controls, perhaps because there was always the comfortable, but ultimately irresponsible, assumption that the Government of the day would stand as guarantor for investors if anything went wrong.
In December 1998, the National Savings agency entered into an agreement with Siemens Business Services, which led a year later to all the operations and administration of National Savings being subcontracted to Siemens. There were two dangers in that arrangement.
First, Siemens's track record elsewhere in the public sector has been less than satisfactory. One has only to think of the costly mess at the immigration and nationality directorate to appreciate that Siemens can get things badly wrong.
Secondly, I believe that the decision to transfer the entire administrative organisation out of an agency such as National Savings to a subcontractor, simply because the agency lacks management expertise and information technology skills of its own, is not a sensible, long-term public service solution. It does not create a situation in which the public may participate through share ownership, but merely places a hopeful bet on an outside partner, with no real means of control for the agency if performance does not come up to standard.
It would be better for the agency to set about recruiting and building its own in-house management and IT capabilities. That would leave open for later the option for the agency to be privatised or not, according to policy and demand.
The National Savings agency was 11 months late with its undertaking to complete the investigation into its financial accounting systems. Subsequently, it claimed that the net discrepancy found was just £4.6 million, which management considered insignificant against the total funds under management of £63 billion. However, the net figure of £4.6 million reflected positive and negative adjustments of £40 million and £44 million

respectively. Therefore, the unaccounted errors came to £84 million. Small savers are entitled to better custodianship than that.
The twentieth report was entitled "Home Office: Handgun Surrender and Compensation". In 1997–98, firearms legislation—which I felt at the time, and still feel, was rushed, ill considered, intrusive and likely to have little of the desired effect—led to thousands of responsible and decent people, who either collected firearms or were members of target-shooting clubs, having to surrender to police a total of 162,000 handguns. The legislation did not touch the millions of weapons still held illegally by villains and lawbreakers that are still being brought into the United Kingdom undetected.
In the rush for action, the Home Office had not made an accurate assessment of the number of guns to be handed in, or of the consequent drain on police time. The Home Office also did not have in place an efficient administrative system to compensate owners promptly for handguns. Many owners had to wait more than a year to be paid, and it took the Home Office 15 months of confusion to reach the conclusion that more staff were needed to process claims. The Home Office said at the outset that it would handle 4,000 claims a week, but ultimately, it dealt with 400 claims a week. The innocent collectors and shooters—who suddenly found that, through no fault of theirs, Parliament had banned their hitherto lawful hobbies—deserved better treatment.
The twenty-fifth report, "MAFF: Arable Area Payments Scheme", is an example of what I call the Brussels effect on government. The scheme was introduced in 1983 and is the largest of the common agricultural policy schemes administered by MAFF, paying £1.1 billion per annum to British farmers.
What is worrying is that, over the five years 1993 to 1998, the cost of running the scheme grew by £3 million, which is a 21 per cent. increase. Rather than achieving greater efficiency over the five years of experience, the opposite occurred. MAFF gives as a reason for that the constant stream of rule changes emanating from Brussels.
Bearing in mind what the Committee saw on our visit to Brussels—an utterly cavalier attitude to financial controls and an obsession with bureaucracy—the waste of time and effort and the escalating cost to MAFF are unsurprising, but nevertheless deplorable: and all for what purpose? MAFF says that, in 1996–97, it found 2,700 irregularities that led to administrative penalties, but in the United Kingdom, in five years, there have been only seven prosecutions for fraud on the scheme.
Combating fraud was high on the agenda for the Committee's visit, earlier this year, to Brussels and Luxembourg. The twenty-ninth report, "Financial Management and Control in the European Union", is really misnamed, as it might more accurately have been entitled, "The lack of financial management and control in the European Union". I agreed to the report, but should say that it could justifiably have been worded even more strongly.
We concluded that there is a lack of clarity about who is accountable to whom, and for what. We said that there is a cultural emphasis on devising policy without regard to the consequences. We talked about dated staffing codes, inadequate financial reporting and ineffective arrangements for combating fraud. We might equally have underlined the arrogance, the complacency and the


introverted preoccupation with political jockeying and horse-trading for positions of privilege within the Commission's bureaucracy. There was no real regard for financial control or for the taxpayers' interests in Brussels.
If that is the climate in which an overarching European federal power is being constructed, with a single currency to be followed by a centralised European tax-raising system, I want no part of it, because it will not serve the best interests of this country.

Maria Eagle: I am grateful for the opportunity to speak in this debate. I wish to start by reiterating the thanks that my right hon. Friend the Member for Swansea, West (Mr. Williams) and the Committee Chairman, the right hon. Member for Haltemprice and Howden (Mr. Davis), gave in respect of the National Audit Office and the Comptroller and Auditor General. While my remarks may be briefer, they are meant no less sincerely. We could not do the job that we do without the NAO and the hard work of its 750 staff.
We could not begin to deal with the NAO papers and two hearings a week without the effort and work of the Committee Clerk, Mr. Ken Brown, and his staff. I wish to place on record my thanks to them. It is often the mundane things, such as having the right report in one's hand, that are an essential prerequisite to scrutiny in this House. One cannot scrutinise the Executive without the right report.
I speak with a tinge of sadness in this, my third such debate as a member of the Public Accounts Committee. As the ever-sharp eyes of the Committee Chairman spotted, the Order Paper shows that this is to be my last day on the Committee, as I am to be discharged as soon as the debate ends. The Committee of Selection works in mysterious and wonderful ways, and I hope that this decision was not an early verdict on my speech.
I will miss being a member of the Committee. It has been a remarkable introduction for a new Member of Parliament to one of the core functions of Back Benchers, and all Members of Parliament—to scrutinise the Executive. I do not mean just the Government or politicians, but Whitehall, as the PAC scrutinises Whitehall more fully than the politicians.
Those who are present today will have seen us lean back in our seats at the mention of politics. That is odd for politicians. However, an essential prerequisite of the effectiveness of the Committee is that party politics and arguments over policy are taken out of its considerations. It is difficult at times to ignore the political situation, and it is difficult for a politician to resist the temptation to resort to looking at a matter in one particular way. However, the Committee is there to scrutinise the Executive, and primarily the accountability of Whitehall and the accounting officers.
The NAO and the Committee have a tough year in front of them, and that is another reason why I am sad to be leaving the Committee. It feels like I am abandoning the Committee at the time of its highest work load—although I am sure that my replacement will be as assiduous and sharp as I could ever have been.
The Committee and the NAO has had to deal this year with the advent of resource accounting, and with issues such as devolution which have marked a huge change in

the way in which the Committee works, and these changes will continue. It is easy to say "resource accounting and budgeting" but it is not so easy to do. The transition is likely to be more long standing and a little more painful than it might seem.
It will be difficult for the Committee because while resource accounting and budgeting will make budgets more transparent, it will not make understanding them any easier. It will be more difficult for members of the Committee who do not have accountancy training—that is just about all of them—to follow matters with their usual and expected clarity.
The heavy work load of the Committee teaches Members to organise themselves properly, to pick up on the important points and to leave the less important points to one side. My right hon. Friend the Member for Swansea, West made it clear that there was an enormous task of scrutiny in front of the Committee, and it is essential that Members are able to home in on the important points. The NAO does that on behalf of the Committee, but the Committee must take that further—particularly in respect of value-for-money reports. With only 15 minutes of questions per hearing, every Committee member must carefully consider the points that they wish to raise.
My overwhelming impression of the work of the Committee is that it is resisted by Whitehall, although not by politicians. In this, I am speaking about all Governments—not particularly this one or the previous one. However, Whitehall and the senior accounting officers, who are "the scrutinised" in this sense, do not like the scrutiny and seek ways of minimising it. In my first year on the Committee, we had an assurance, via a Treasury minute, that a convention called "not for NAO eyes" would be removed.
Another perennial issue is access. The Committee has constantly asked for extended access at every legislative opportunity, but Whitehall's response has often been that the Committee does not need it. We have made progress, but perhaps what the Comptroller and Auditor General really needs is a financial right to roam Bill. It seems simple to me—if it is taxpayers' money, the Comptroller and Auditor General should have access to it. The difficulty is in putting that into effect. In Treasury minutes, Departments produce reasons why that cannot be done, rather than ways of achieving it. I cannot see a problem with allowing the Comptroller and Auditor General access to taxpayers' money—although more staff may be needed.
Non-politicians in particular do not like scrutiny, although politicians are used to it. My right hon. Friend the Member for Swansea, West referred to the number of times that the accounting officer responsible for the stewardship of the money we are concerned with is not the person who comes before us. It is remarkable how often accounting officers retire, are promoted or disappear one way or another just before a hearing of the Public Accounts Committee.
I do not wish to delude myself, and while the PAC is effective, it is not 100 per cent. effective. It does not achieve 100 per cent. perfect scrutiny, as I have said before in these debates. However, I am almost persuaded to reconsider my view of the effectiveness of the Committee when I see how regularly accounting officers


who are supposed to appear before it choose to disappear somewhere. Perhaps we are a little more effective than I thought.
The Government should give some thought to the issue of disappearing accounting officers. I would enjoy seeing the figures of my right hon. Friend the Member for Swansea, West for the previous Parliament and comparing them with figures for this one to see how regularly accounting officers move just before Committee hearings.
The right hon. Member for Haltemprice and Howden referred to the way in which accounting officers complain about the evidence sessions and the Committee's confrontational style. I say that they should stop whingeing. They have all year to do their jobs, but I have 15 minutes to do mine while they are front of me. If that leads to some confrontational questioning, I am sorry, but accounting officers are often responsible for billions of pounds of expenditure. They have to realise that they are accountable to the Committee and should stop complaining about how it chooses to do its job in a restricted amount of time.
Whitehall does not always respond positively, and two reports in the past year show how responses from the Executive can differ. The first is the twenty-fourth report on the flotation of Railtrack. I do not intend to go into huge detail about the political background of that flotation, except to say that the then Government's policy was to privatise. Legislation had been enacted to enable the privatisation to take place and the first of the private companies—of the 100 or so formed from what had been British Rail—had been formed in January 1996. Privatisation had finished by March 1997, so that was a speedy timetable.
In other reports, the Committee has considered other aspects of rail privatisation, including the rolling stock operating companies, the train operating companies and the freight operating companies, and it has an overall picture of the transfer of the entire business to the private sector. The Railtrack privatisation was effected speedily, for whatever reason. The Committee suggested that the failure to sell the shares in tranches led to a potentially massive undervaluing of the business. The Committee also concluded that the timing of the flotation was designed to maintain the momentum of the entire privatisation process in the rail industry, and that that appeared to take precedence over bringing in the maximum amount of money. What is not disputed is that the shares were sold for £3.90 each, or for a total of £1.9 billion, and when the Committee took evidence on the flotation of Railtrack the shares were worth £15.51 each, a total of £7.8 billion. That is a measure of the potential undervaluing of the company.
The Treasury minute that forms the departmental response to the report makes interesting reading. Committee members will know, although others may not, that the Committee gives its conclusion and the Department responds in what is called a Treasury minute. The Committee concluded that, in the case of Railtrack, value was not obtained, but the Treasury minute merely noted the Committee's description of its view of the sale. It may be that 92 per cent. of the Committee's recommendations are accepted, but some are not, and in this case there was clear departmental resistance to the Committee's analysis.
The Committee also concluded that the timing of the sale was more about the need to maintain momentum in the privatisation policy than it was to ensure value for money. The Department confirmed that the timing of the sale was influenced by the need to maintain momentum, but the Treasury minute then attempts to justify that and claims that it was an objective of policy. It makes no attempt to deal with the point that value for money was not obtained.
In Railtrack's case, as in other cases, Committee members trod carefully in the report, because the issue was politically controversial at the time. The Government's policy was diametrically opposed to that of the Opposition, but the Government speeded it through to complete it before the general election. Whatever we may think of that, it is clear that, some time later, the Department is still resisting, not accepting, the Committee's points. There is nothing new about that and, indeed, last year—in our report on procurement in the Ministry of Defence—we made recommendations that had first been made in Gladstone's time and the Ministry had still to deal with the issues. It is not unusual for Departments to accept recommendations but to fail to change the way in which they work.
My second example is the report into the further education sector and alleged irregularities at Halton college, which was mentioned by the right hon. Member for Haltemprice and Howden. The FE sector is responsible for spending some £5.6 billion of public money, and since 1993–94 the Committee has produced a series of reports that have been seriously critical of problems with governance and propriety in the sector, which have led to notorious incidents at, among others, Halton college and Bilston college. No doubt, others with similar problems remain to be investigated.
Halton is one of 435 FE colleges, so if problems are endemic in the system, that is a matter for great public concern. The report into its problems concluded that the college claimed almost £14 million more in grant than it was entitled to and 114 staff lost their jobs as a direct result of the financial problems caused by having to repay that money. That led to a further £1.8 million in redundancy costs and a serious deficit in the educational courses that the college was supposed to be providing. In addition, obvious problems were caused by the fact that the principal and deputy principal spent 12 months of their five-year reign abroad on jollies—not to put too fine a point on it—at a direct cost of £210,000 and an incalculable cost in their credibility in the college.
The irregularities must have been common knowledge in the college a long time before they were brought to the attention of the National Audit Office by a whistleblower.
Eventually, the principal and deputy principal were suspended on full pay, and finally they left—but not before drawing an extra £200,000 in salary before the matter was resolved. I deplore the fact that the college misled the Committee about whether legal costs had been paid to those two. Understandably, they had sought to delay their departure from the college because they were still drawing their full salaries—but to expect the college to pay the legal costs of creating the delay beggars belief. The Committee was originally told that the college had not paid, but later it emerged that it had.
All the governors who allowed that to happen have now resigned, but the college, and the local area, have been left with a serious problem. It is difficult to see how such


poor governance was not picked up by the Further Education Funding Council. Moreover, at the time of some of the worst excesses, the college's internal and external auditing, which was carried out by the same private sector firm, Deloitte&Touche, did not detect the problems and gave the college a clean bill of health. The FEFC's procedures for picking up problems did not reveal what was going on, either. That shows poor performance by the funding council, which if repeated elsewhere would cause considerable problems wherever there was a governance issue.
I shall now deal with some of the Treasury minutes that have been sent in response to the report. The Committee was struck by a reference in the report to the fact that the Department was willing to act speedily to put the problems right. About time, one might say, in view of the number of FE colleges with problems.
The Treasury minutes in response to all the conclusions start with sentences such as:
The Department for Education and Employment…Halton College…and the Further Education Funding Council…accept the conclusion",
The Department, the Funding Council and the College accept the conclusion",
and
The Department welcomes the Committee's conclusion".
That is in marked contrast with the responses in the same document from the Department of the Environment, Transport and the Regions concerning the flotation of Railtrack.
Two days after our evidence session, the Department for Education and Employment was already issuing new guidelines to the Further Education Funding Council to put right some of the problems, and it has now decided to legislate to abolish the funding council and change the way in which the sector is governed and its governance overseen. That, too, is in marked contrast to the reaction of DETR in connection with Railtrack.
That illustrates Whitehall culture. The Public Accounts Committee teaches all its members about Whitehall Departments. One can soon spot which are profligate, which can and cannot control their expenditure, which do not even try to control it, and which are quite good at doing so. One would not do this publicly, but when individual accounting officers appear before the Committee, one can also make judgments about them, and about their effectiveness and their commitment to carrying out their duties.
That is one of the fascinating things about being a member of that Committee: one can learn a lot about how Government works. It has been an interesting experience, and I apologise to my fellow members of the Committee for giving up on them at this stage. I may be back some time; I do not know. I wish them well for the coming year, when they will be busy with legislation passing through the House, with getting to grips with resource accounting and with all the issues of access that every Member has mentioned.
The FEFC example shows that politicians can listen, and can kick Whitehall until it acts. Whitehall must understand Parliament a little better; Parliament is all about accountability, and politicians are here to ensure

that there is accountability. They themselves are accountable to the electorate, and I think that accounting officers need to realise the meaning of that word.

Mr. Richard Page: I begin by expressing my regret at the departure from the Public Accounts Committee of the hon. Member for Liverpool, Garston (Maria Eagle). Her notional 15 minutes have shown why she will be sadly missed, and we wish her every success in the greener pastures to which she is migrating.
I have had the privilege of being on the PAC since 1987, with three years off, either for good behaviour or for bad; I am not sure which. I am firmly of the opinion that it is the most important and influential of the Select Committees. It achieves that because we have the invaluable support of Sir John Bourn and his staff.
In addition, we have reports that are agreed with the accounting officer, which enables us to cross-examine the witnesses without the constant party political bickering back and forth that characterises so much of our general parliamentary activity. That gives the Committee strength.
The party political divide is crossed on the Committee, and hon. Members on both sides of it clearly understand the concept of accountability and the need for correct financial management. That is fundamental to our work, and I am worried that the Bill that will come up before us in a week or two—the Government Resources and Accounts Bill—may weaken the work of the National Audit Office and the PAC. I hope to touch on that idea later.
First, however, I come back to the idea of crossing the political divide. It is one of the Committee's endearing virtues that we have succeeded, without recourse to a vote, in reaching agreed conclusions on every report on every subject since I have been a member of it. That achievement is greatly to the credit of my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), the present Chairman, and his predecessor, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I praise both of them, as I do in my speech on this subject every year, so that I might get called early for the taking of evidence—but so far that has not worked, and next year I may have to embark on a different tack if it does not work this year either.
I strongly supported the Committee's initiative earlier this year in arranging two "awaydays" to examine the arrangements for controlling European Union finances in Brussels, Luxembourg and Strasbourg. Unfortunately, as our Chairman and others have said, we found serious and unacceptable problems in the EU's institutions. There was a definite lack of clarity about who was accountable for spending, as well as an unwillingness to consider how policies should be implemented once they had been devised.
Almost all the financial auditing and reporting procedures were inadequate, and the measures available to combat fraud were conspicuous by their absence. It is extraordinary that members of the European Commission should be reluctant to accept any personal responsibility for the Commission's actions and for those of their own directorates. That is a little like a company chief executive not wanting to take responsibility for the actions of his staff.
We need to know whether the new commissioners, headed by Mr. Prodi, and the individual directors general, will be made directly accountable, inside the Commission and to the European Parliament, for their responsibilities. We must demand to know the progress that has been made towards clarifying the duties of the Commission and member states in the operation of some 1,500 structural fund programmes.
It is equally worrying that the Commission has been able to develop policies without considering fully the risks and the resource implications involved, and the financial controls needed to ensure that those policies succeed. At present, Commission programmes are like fire-and-forget missiles: they are devised and fired, but we have no idea where they will end up, or what their cost and efficiency will be.
The European Union spends about £54 billion a year, but is run like one of our ancient universities, where the dons leave the bursars to carry out the schemes that they have approved. It is no wonder that the number of small schemes supported by the Commission has grown so rapidly, nor that there have been so many instances of error and fraud.
The House debated these matters earlier this year, and I will resist the temptation to repeat what was said then, even though it well bears repetition. So far, the Government's response has been inadequate. They need to take a much tougher line to ensure that Britain's public money is not wasted in the Commission.
I could spend until 7 o'clock, when the plug will be pulled on this debate, listing all the schemes that have gone wrong, but I shall limit myself to a couple of examples. They have emerged thanks to the persistent efforts of a whistleblower, who tried for years to get matters put right through official channels. Eventually, a committee of independent experts was called in to investigate.
In its March report, that committee states that it found that one small item in the humanitarian programme had led to four fictitious contracts being issued, to a total value of £1.6 million. Part of that sum had been spent on employing 11 staff to implement the programme. Similarly, a programme to support tourism was begun in 1989. By last spring, 76 organisations or individuals had been the subject of criminal prosecutions or inquiries in the European Union. The head of the supervising unit was found to be engaged in "unauthorised external activities" that gave rise to "embezzlement, corruption and favouritism."
Members of the Public Accounts Committee will know what a sacrifice it is for me to restrict myself to two such cases, and to resist going into detail about the cochineal beetle scam, which is a story in itself.
Perhaps, given such examples, we should not be surprised that the former Commissioners and directors general did not want to take personal responsibility for such matters. As has been mentioned already, that neglect was made worse by the fact that internal promotions inside the Commission were strongly influenced by attempts to maintain a balance between member state nationals. People have been promoted not according to ability and skill, but according to their distribution on a nationalist basis.
That is not the way to ensure that taxpayers' money is correctly controlled and spent. The PAC report earlier this year showed that the opportunities for error and fraud had

increased. There is no doubt that successive European Commissions have failed to respond adequately to the concerns expressed by the European Court of Auditors and by the European Parliament's Committee on Budgetary Control.
For all practical purposes, until now no Commissioner or member of staff—however incompetent or useless they may be—has been liable for dismissal. I am prepared to say that Brussels needs a strong infusion of the principles and practices governing accountability for public funds that operate in the United Kingdom. Everything that I have heard, in April and since, reinforces that contention.
To put the matter bluntly, the European Parliament must grasp the nettle and insist on the introduction of proper accountability. We should let Sir John Bourn examine the Commission's activities and say what its members should be doing. At the same time, the European Parliament should set up a PAC of its own, with the authority and power to call directors general before it, so that they can be held responsible for the money that they dish out to projects so casually.
I shall not continue in this vein except to say that the Committee's Chairman has been delicate and gentle in his treatment of the matter, and I hope that I can stiffen his resolve to be even firmer in the future to ensure that Europe spends our taxpayers' money in the most effective and efficient fashion.
My comments should not blind us to our responsibility to make sure that we note the continual challenges facing Departments and agencies. One recurring theme, which the Chairman touched on when summing up the Committee's activities this year, is the failure of public bodies to get right their provision of new information technology programmes. Time and again, we see a catalogue of doom and disaster. I shall not repeat the comments about the fiasco of the replacement system for national insurance contributions—I imagine from my postbag that the show still has some way to run.
The arrangements for privately held handguns, referred to by my hon. Friend the Member for Bexhill and Battle (Mr. Wardle), gave another opportunity for confusion and delay. A number of my constituents waited much longer than a year for compensation. Their letters and queries did not receive the effective and efficient response expected of a Department. As my hon. Friend said, the Department thought that it could handle 4,000 cases a week, but the figure eventually reduced to 415 a week, adding to my constituents' confusion and frustrations.
The lessons of this and other problems in designing and operating new technology do not appear to have been learned elsewhere. I am always conscious, when speaking this late in a debate, that some examples have already been given. However, I should like to give the example of the immigration and nationality directorate and the Home Office's lack of flexibility. The plan to reduce staff numbers as a new computer system started operating was not realistic because, as we know, the system did not work properly, and it took longer and longer to process applications. However, the reduction of staff proceeded apace, leading to a double whammy. The computer was not working well, but, even so, staff numbers were being reduced. The number of applicants waiting ballooned until reality eventually dawned. The directorate had to reverse its staff reduction policy and take on people to try to reduce the number of people waiting for their applications to be considered.
I would be very surprised if any hon. Member has not been touched, through a constituency case, by that delay. There are striking parallels with the more recent problems in the Passport Agency. I must not pre-empt the PAC's findings, but there is no doubt that some passport offices came very close to a meltdown. I know for a fact that one of my hon. Friends and his secretary had to deal with some 300 cases during that difficult period. I suppose that historians of trivia will have a field day, given the number of umbrellas that the Passport Agency had to buy to keep the long and frustrated queue dry in wet weather.
The Financial Secretary to the Treasury would be wise to bear in mind the comments of our Chairman on aspects of the Government Resources and Accounts Bill. I favour resource accounting, which will bring us into the real world by paralleling what is already accepted practice in the private sector. However, I am not surprised that there are problems. The National Audit Office was shown a first draft of the Bill on 22 October. To hit such a responsible and respected organisation with a Bill less than 30 days before its presentation and First Reading is not good enough.
I am worried by the suggestion that the NAO will not be clearly accountable to Parliament. The Bill is ambivalent and may be interpreted as meaning that the NAO could report to the Treasury. I hope that that interpretation is wrong. If not, that would be the same as allowing the auditors of a private company to report to the directors, not the shareholders. That would undermine the work of the NAO and the PAC. The Bill gives us an opportunity to improve our accountancy practices and operations. However, I fear that it may have the opposite effect.
The PAC must never lose sight of its responsibility to learn from the problems that arise in our Departments and agencies. We must try to apply the lessons across the board. That is our duty to the country and to the taxpayer.

Mr. Barry Gardiner: I now know how those people feel who shake one's hand at parties but who, when asked what they do for a living, try quickly to change the subject. When, gradually, one steers the conversation back round to insisting on asking what they do for a living, they blanch, then say, in a most apologetic manner, as if they are killing off any possibility of an interesting conversation, "I am an accountant".
Many people assume that members of the Public Accounts Committee are a similarly boring, number-crunching group of people, who pore over sets of statistics in a dull, if worthy, way. Nothing, of course, could be further from the truth. As a new member of the Committee, I am the other type of person avoided at all costs at parties—the unashamed enthusiast. I thank the right hon. Member for Haltemprice and Howden (Mr. Davis), the Committee Chairman, and my hon. Friend the Member for Liverpool, Garston (Maria Eagle), who have given exceedingly good advice and helped me to settle quickly into the life of the Committee.
I am sorry that my hon. Friend will leave the Committee soon, but few will be surprised by her promotion, in which I wish her every success. Her unique and acerbic style will be missed by everyone except those

unfortunate enough to have come before the PAC as ill-briefed or incompetent witnesses. To those people, she showed little mercy, and we shall try to maintain her high standards.
The PAC reviews the whole range of Government activity. We have investigated matters this year from alpha to omega, from the arable area payments schemes to the millennium bug. Our intention is always the same—to assess whether the Government are operating at maximum efficiency and obtaining good value for the money that they spend.
I am aware that the Committee has been accused of laying more emphasis on apportioning blame where things have gone wrong than on making constructive proposals. I have not found that to be true. Certainly, the Committee can be harsh on witnesses whom it believes have failed in some respect. However, I have always found that the focus of the Committee is to learn the lessons of why things went wrong and to ensure that the same problems do not recur. Its concern is always for those who have suffered by the failure under review. The principle is that, by holding people to account, the Committee decokes the engines of Government.
I shall cite one clear example of the human consequences of a failure that was investigated by the PAC this year. The national health service's cervical screening programme was first established as a national programme in 1988. It aims to reduce the figure of 3,500 women who develop invasive cervical cancer each year and the 1,300 who die as a result.
The Comptroller and Auditor General prepared a report for the Committee on the screening programme. He reported that early diagnosis and treatment in colposcopy clinics had prevented up to 3,900 invasive cancers and resulted in morbidity rates falling by 7 per cent. a year. However, there were notable breakdowns in the screening programme—most notably at the Kent and Canterbury hospital.
The Committee identified significant quality failings at every stage of the cervical screening programme, affecting thousands of women every year. The Committee found that 13 health authorities had not yet achieved the target of screening 80 per cent. of women between the ages of 25 and 64 within a five-year period. That is a disgrace when we know that reaching that five-year target would prevent 84 per cent. of cervical cancers.
The Committee was extremely forceful in stating that lives were being put at risk by that failure. Brent and Harrow—my own authority—was one of the 13 health authorities that was failing in that way. I was not a member of the Committee when it produced its report, but that report alerted me to the problems that women in my constituency faced. Why should they be exposed to that risk and why should one in 12 have to endure the terrible stress and worry of a repeat smear simply because the first was not taken properly?
Brent is one of the most ethnically diverse boroughs in the country. The Committee pointed out that women from ethnic minorities are under-screened and that adequate data are unavailable for many ethnic groups. Armed with the Public Accounts Committee report, I was able immediately to contact my local health authority and demand action to improve the screening available to local women.
I was not alone. Within three weeks of the report's publication, the then Secretary of State for Health had met health executives from my area and a plan of action was set in place. Recommendations contained in the report about incentivisation of local general practitioners and targets for implementation were set. More recently, the Government have injected a further £23 million into cancer prevention and palliative care.
My hon. Friend the Minister for Public Health has now been given responsibility for implementing the Government's policy for tackling cancer and for effective screening. I am delighted to be able to tell the House that the health authority in my area has now reached a figure of 78 per cent. compared with the 80 per cent. target—an improvement that I and all the women in my constituency welcome.
However, my purpose is not to praise the Government for their response, nor to pursue a constituency matter, but to show how vitally connected is the work of the PAC to the lives of our citizens. The work of the PAC is not simply to save money, although its Chairman has set out how successful it has been in doing so. The Committee's work is not just about bringing people to book for their mistakes, although the reference made by my right hon. Friend the Member for Swansea, West (Mr. Williams) to backaches that lead to early retirement suggests that the Committee is also effective in that scrutiny role. Above all, the PAC's work is to improve the lives of our citizens by improving the service that they receive from Government. When I became a Member of Parliament, it was my belief that that was the job of all Members—I have not changed my view. That is why I consider it to be such an honour to serve on the PAC.
I am delighted that my hon. Friend the Financial Secretary to the Treasury is sitting on the Treasury Bench. I welcome him to his new role as Minister concerned with the PAC, because I know him to be someone of absolute integrity and clear principles. The pleas that he has heard this afternoon, from all those Committee members who have spoken, about the vital importance of allowing the Comptroller and Auditor General complete and unfettered access, and of making him clearly accountable to Parliament, and not to Whitehall, will not have gone unnoticed. When he responds to the debate, I urge him to do so without reading the frantic scribblings of the civil servants in the box, but basing his comments on what he knows to be right, and on what he knows the principles of the Public Accounts Committee to be.

Mr. Andrew Stunell: I speak very much as an outsider. I am not a member of the Public Accounts Committee—unlike my hon. Friend the Member for Newbury (Mr. Rendel), I have not just joined the Committee, and unlike the hon. Member for Liverpool, Garston (Maria Eagle), I have not just left it—I simply observe what it does. If imposed on Departments, its record of productivity would be most welcome. To produce 38 reports as the result of a year's activity is a great tribute to the Committee in general and to its Chairman, the right hon. Member for Haltemprice and Howden (Mr. Davis), in particular.
I was impressed by the comments of the hon. Member for South-West Hertfordshire (Mr. Page) on the way that political debate was replaced by consensus—or more,

perhaps, that a pack of politicians was collectively hunting down inefficiency and bureaucracy not in competition, but in concert. That, too, is a tribute to the Committee's work.
I have a few brief points—especially on the Committee's twelfth report—but I am moved to comment on European Union financial control by the words of the hon. Member for South-West Hertfordshire. I realised that there were difficulties, but he impressed on me how bad they were when he said that they were as bad as those in a typical British university. Had I realised that, I might have spoken primarily on that subject.
I am a member of the Select Committee on Procedure, and I remind the House that we produced a detailed report on resource accounting and its implementation. We took evidence from a wide range of individuals and organisations, including the Comptroller and Auditor General and the Treasury. I do not think that it is a breach of privilege if I point out that, in drawing up its report, the Committee was nearly minded to recommend that the introduction of resource accounting should be delayed for a year, because we were worried whether there was sufficient resilience in the financial control systems—especially in individual Departments—to undertake the transfer and changeover process on a short time scale. Bearing in mind that things have not changed much for 100 years or so, the question arose whether it would be possible to make that change in the proposed time scale. It is interesting to read what the PAC has said about that and the concerns that it has expressed. I hope that the Minister will give not a bland reply, but chapter and verse about the implementation plans. The Government Resources and Accounts Bill will be debated in the House next week, and it is very much incumbent on the Treasury and Treasury Ministers to persuade the House that the necessary safeguards exist.
I speak as a strong supporter of the introduction of resource accounting. For too long, public accounts and public budgeting have been distorted by outdated procedures, but various splendid new systems of IT have been introduced to great hopes and a loud fanfare, only to crash flat on their face. We cannot afford that to be the case with the resource accounting system.
The second report on which I want to comment briefly is the twentieth report, which relates to the handgun compensation scheme. I do so as a constituency Member who is still in detailed dialogue and correspondence with Ministers about the scheme's failure to work in a timely and adequate way. There is every sign that those who administer the scheme have only the faintest and most tenuous idea of what is involved, and of the technologies and the implications. Many perverse and contradictory decisions have been taken. To those who are very much part of the shooting community and who know their art backwards, that is a constant cause of frustration, and such technically unsustainable decisions reflect badly on the Government and the process of government.

Sir Robert Smith: Does my hon. Friend recognise that the frustration is made even greater by the fact that those people were law-abiding citizens, causing no threat, and that they therefore feel that, if there is to be compensation, it should be made efficiently and effectively?

Mr. Stunell: Yes, I agree with my hon. Friend.
I do not wish to detain the House with the complexities of different types of equipment and paraphernalia—shooters in my constituency have been quick to brief me on that. In short, those who administer the compensation scheme obviously have only the foggiest idea of the differences between, for example, various types of ammunition press. I agree with my hon. Friend that the scheme has not shown the Government in a good light.
I welcome the Committee's twelfth report, entitled "The Office of Electricity Regulation: Improving Energy Efficiency Financed by a Charge on Customers". I know that the Financial Secretary, who, in a previous existence, took a close interest in energy efficiency and fuel poverty issues, will take an interest in that report. It is a good report, which identifies some relevant issues, but I felt that it was tentative in suggesting appropriate solutions. Therefore I shall highlight those issues and say what I believe the way ahead might be. I should be interested to hear the Minister's response.
The twelfth report says that there is some contradiction in what the regulator is required to do. On one hand, he is required to promote the efficient use of electricity; on the other, there is an obligation to deal with fuel poverty. About 8 million households in this country are the victims of fuel poverty and spend an excessive amount of their disposable income simply on the job of keeping warm. The Government have established and adopted the Kyoto target to reduce carbon dioxide and other greenhouse gases by 12.5 per cent. of the 1990 level by 2010. I am sure that the Minister will want to confirm that the Government have adopted a higher voluntary target of 20 per cent. for the same period.
Reducing fuel poverty and reducing carbon dioxide emissions are twin objectives, but the Committee's 12th report suggests that there is some conflict and tension in achieving those objectives within the framework that the regulator faces. However, there is a solution to the problem. It is well established that 40 per cent. of the energy used in this country's homes is wasted. Poor households are just as much victims of that energy wastage as rich and high-consumption households. The size of the household and the income of the family make no significant difference to the amount of energy wasted in a home. Therefore, it is feasible that a more efficient use of energy—electricity, in particular—will lead to something like a 40 per cent. reduction in consumption and, hence, a 40 per cent. reduction in bills, even if there is no change in pricing levels.
That can be achieved with an increase in the quality of life. It does not require hairshirts and pullovers; one can improve the quality of one's life by insulating one's home more effectively and running it more efficiently. That would result in less fuel poverty and an achievement of the targets for the greenhouse gas reductions that are mentioned in the twelfth report.
The report also refers to the Office of Electricity Regulation, Offer, which has now become the Office of Gas and Electricity Markets, Ofgem. I want to point out to the Minister and to Ofgem that it is possible to have one's policy cake and eat it. Some of the fears expressed in the report are unfounded.
Work can be done on insulation standards, heating controls and on changing electrical systems. If there were a commitment to replace all electrical heating in homes

by 2010, that would reduce carbon emissions by about 6 million tonnes a year. Straightforward and practical measures can be carried out through the regulatory and grants system, and they are within the Minister's hands. They would have a significant impact on both carbon emissions and fuel poverty. I have not even mentioned what can be achieved for domestic equipment efficiency. Older domestic equipment is less efficient, and the poorest households often have the oldest and least efficient domestic equipment.
I welcome the report's note of caution on how implementation is proceeding. No one could possibly object to its proposal that the energy distribution companies and others should exercise more control over energy efficiency. It is unnecessary and wrong for grossly different prices to be charged in different places—and sometimes even in the same area—to implement the Government's plans to make efficiency improvements to homes.
However, that note of caution should not be taken as a signal—this was hinted at in the report—that, to reduce fuel poverty and to increase social inclusion, there should be a relaxation in the way that the grants scheme applies the policy on reducing carbon emissions.
Will the Minister confirm that there is an intention to have joined-up action on reducing fuel poverty and emissions? We have had an excessive number of consultation documents on all matters relating to energy, energy efficiency and renewables. I have filing cabinets full of such documents. We need not more consultation documents or even, perhaps, more reports from the Public Accounts Committee, but more co-operative action from the Department of Trade and Industry, the Department of the Environment, Transport and the Regions and the Minister's Department, the Treasury.
A clear remit must be passed on to Ofgem—which, when the report was written, was Offer—setting out a regulatory environment that will achieve what is necessary, which is the translation of our energy supply companies into energy service companies. We need a much more vigorous and rapid move towards energy service companies and parallel, similar mechanisms. We need action, not just plans and consultation.
We probably need finance. When Liberal Democrats mention money, people say, "Well, of course they always want to spend more." However, I must point out that in this case, the distribution price review will be included in the utilities Bill that was announced in the Queen's Speech. The Minister will want to confirm that every household in the country will make significant savings on its electricity bill. Government figures suggest that consumer electricity bills could be reduced by £60 per household by 2005, representing an overall saving to consumers of £1.25 billion in the next five years. That contrasts with the current levy of £1 per year imposed on every consumer to fund those programmes—a total levy of £25 million.
It is appropriate that a Treasury Minister should be present today, because I want to suggest that the right way to approach the situation is to take just a small fraction of that saving to consumers under the new distribution price review to improve the amount of support that is given to programmes such as those described in the twelfth report.
I welcome the twelfth report, but it runs some risk of deflecting Ofgem from its key task. The report does not emphasise enough the fact that reductions in carbon


dioxide emissions and fuel poverty can be achieved by the same policies as the Government have already implemented. Of necessity, the report does not consider the overall cost-effectiveness of all the interlocking powers and duties imposed on the regulators, on budgets and on Departments to achieve the Kyoto target, which the Government have accepted, and their own social inclusion aims.
The PAC has done a very good job with its wide range of reports. I welcome them all, including the twelfth report. Although I am a little worried about the impact that it might have on the Government, I hope that the Minister, in replying to the debate, will assure me that the Government will take the good points from the twelfth report and not be diverted from their intentions on greenhouse gases.

Mr. Tam Dalyell: I am concerned simply with the fifteenth report, "HM Customs and Excise: The Prevention of Drug Smuggling".
It was 37 years ago to the week when I was asked by the then Chairman of the Public Accounts Committee, Harold Wilson, to join the Committee. My membership was one of the great educations that any Member of Parliament can have. As my right hon. Friend the Member for Swansea, West (Mr. Williams) can easily imagine, Harold Wilson was a glittering Chairman. He got through the business, asked the most searching questions very quickly and did not tolerate long-windedness by any of the members of the Committee.
I also served Douglas Houghton of "Can I Help You?" fame, later Lord Houghton of Sowerby, who was another marvellous Chairman, as was the Conservative John Boyd-Carpenter—so much so that I campaigned for him to be Speaker of the House of Commons rather than Selwyn Lloyd, but a fat lot of use that did. I had regard for all of them.
I have not been a member of the Committee for a long time now. The rest of the House should appreciate the hours of serious and desperately important work that our colleagues on the Committee do. Without question, the Public Accounts Committee is the most effective and important Committee of the House of Commons.
I should like to refer—briefly and succinctly, I hope—to paragraph 3 of the fifteenth report. It says:
Their strategy is governed by several themes, including the development of specialist skills, increased flexibility and mobility of resources, focusing on risk, and placing greater emphasis on known or suspected smugglers and giving greater attention to large scale, commercial smuggling and a lower priority to smaller 'personal use' seizures.
It is about drugs. I gave my hon. Friend the Financial Secretary some warning—perhaps not enough—of what I wanted to talk about.
I was chosen by the Speaker to lead the parliamentary delegation to Peru in September. We went to the upper Amazon, where the mayor of Iquitos said passionately, "Yes, it is true that we produce more coca leaves than anybody else in the world, but you can see on the Amazon ships in grey with guns. Yes, they are warships, but they are not going to war with Brazil. We are trying to do something about drug smugglers." He continued vehemently, as did the governor of the province, "You saw all the dogs at the airport sniffing every piece of luggage"—and so we did. That again was all about drugs.
When we went back to Lima for our serious discussions, we went to the United Nations drugs agency, where the very serious Frenchman Vandenberghe, together with his German colleagues and others, endorsed what we had been told in Iquitos. They said, "We will do everything that we can to stop this terrible trade in drugs, but as long as you people in the United States and western Europe are prepared to tolerate anonymous numbered bank accounts in your system, we are fighting with our hands behind our back." That was the considered view of the expert agency.
During our 50-minute meeting with President Fujimori of Peru, who is a tough man, he went even further, saying, "I totally agree with the governor of the province and the mayor of Iquitos. I totally agree with what has been said to you by the drugs agency here in Lima, but action can only be taken on an internationally agreed basis." We naturally asked where he had in mind. He named Cayman and the Bahamas and then mentioned Switzerland too, and said that perhaps the City of London was by no means as perfect as we British would like to believe. I am not saying that great care is not taken in the City and in Switzerland.
I have asked the Swiss, and they say that they look at every incoming sum above £1,000. Well, £1,000 is peanuts, so that stretches the imagination. I am willing to believe that the overwhelming majority of banking firms do their best to find out where money has come from if there is any suspicion that it involves drug-related money laundering, but perhaps some do not. That is why the Committee's suggestions are so important.
I speak to back up what the Committee says at paragraph 5:
The Department did not convince the Committee that their reduced level of resources was a sufficiently considered response to the threat.
Paragraph 6 states:
Over the last decade, the Department have seized increasing amounts of illegal drugs. In 1997–98 they seized drugs valued at £678 million, and estimate that they disrupted some 130 illegal organisations. The average length of sentence passed by the courts on convicted drug smugglers has increased".
The report adds that the Department
should improve their management information in this respect.
Point (x) on page vii of the report states:
There is also a lack of evidence to determine whether the Department's activities provide sufficient deterrence, particularly with respect to major drug smuggling organisations. We endorse the Department's intention to develop their understanding of the deterrent effect that they have and to work closely with other agencies on this issue".

Mr. David Davis: I listened with interest to the hon. Gentleman's comments on numbered accounts. It is inevitable that it is easier for illicit money to hide in a large financial centre. I accept entirely what he said about numbered accounts. It is clear from our report that the strategy followed by this Government and the previous one is failing. The best demonstration of that is that the price of drugs on the street, which is tabulated in the report, has gone down over the past 10 years, both in real terms and in money terms, in almost all cases. Whatever change of strategy emerges, there certainly needs to be a change.

Mr. Dalyell: The Committee's Chairman makes a crucial and pertinent intervention, which I can only endorse.
My impression as an outsider reading the evidence is that the Committee felt that Customs and Excise could do more. I am certainly not going to criticise Dame Valerie Strachan or Mr. Dick Kellaway who gave evidence, but I refer to the latter's answer to my hon. Friend the Member for Liverpool, Garston (Maria Eagle) on page 19. He said:
Unfortunately, other countries do not have the National Criminal Intelligence Service and this is the difficulty. In this country we have got a very advanced one and it is a joint operation between police and Customs and because we share our intelligence, we are able to come up with some gauge about those people who are involved in this trade. Unfortunately, one of the problems of drug smuggling throughout the world is that many of the supplying countries of course are Third World countries, they are countries which are often corrupt, they are countries which of course have very poor law enforcement activity and law enforcement is starved of resources, so they have not got the intelligence which we have got available to us.
As the Committee says, it is a matter of resources.
Having been here a very long time, I can only say that I am more fussed, from the point of view of my constituency, about what is happening with drugs among young people than any other subject, even unemployment or all the difficulties that we have been through over the years. Nothing hurts so much as the terrible havoc that is being wreaked by drugs.
I know that there is no magic solution but I would be interested, at the Minister's convenience, either by letter or in answer to this debate, to learn the general reaction of the Treasury to the Committee's twelfth report. It is a very valuable report and I can only thank my parliamentary colleagues for their work on behalf of the whole Parliament.

Mr. Andrew Love: I should like briefly to comment on the private finance initiative, and will draw heavily on the twenty-third report of the PAC, entitled "Getting Better Value for Money from Private Finance Initiative." I make no apology for that, as I have been trying to resolve many of the complex issues that are involved in this initiative, which is still considered somewhat controversial. One need only listen to the debates in the House or read any of the daily newspapers to know of the controversy that surrounds it. As it develops in new areas, such as education and health—the most recent development is in housing—controversy continues to surround it.
The whole idea of a private finance initiative is questioned in the public mind. In my constituency in Greater London, London Underground is at the centre of the controversy. Although that may not strictly be a PFI scheme—it may be a public-private partnership—the debate is about whether it is a privatisation. Whichever it is, it will not be a privatisation.
These are complex issues. When I tried to resolve them for myself, I looked back to the introduction of the PFI seven years ago, when the Chancellor of the Exchequer at the time, now Lord Lamont, said in his autumn statement that PFI was intended to improve the value for money of public sector projects by encouraging the development of closer relationships between the public and private sectors through the transfer of risk and

responsibility, and to enable the public sector to benefit from private sector skills and innovation in the delivery and procurement of services.
That statement clearly contends that the private sector initiative is about risk and value for money. It is not about value for money in the short term, because we all know that not having to pay capital charges up front will make it value for money in the short term. It is about achieving value for money in the longer term.
I should like to suggest four ways of improving the private finance initiative. The hon. Member for Newbury (Mr. Rendel) and the Chairman referred to the transfer of risk. When the PAC considered the first report on the replacement national insurance computer, the NAO reported to Parliament that that PFI represented strikingly good value for money, provided that the service contracted for was delivered. That is the important part. We cannot transfer all the risk through a PFI. If the project is not delivered, the Department concerned still risks suffering the fallout from the failures of the PFI.
The second report of the PAC showed the fallout from the problems of the Department of Social Security and the Contributions Agency. There was a substantial backlog of payments to pensioners. Some of the poorest people suffered because of that failure. Thousands of long-term and short-term payments could not be made or were made on an interim or emergency basis. That increased the confusion, and the Department failed to respond to the services needed by that community.
We could consider reports on immigration and nationality that are still to come before the Committee. The Passport Service has had similar problems. A little noticed press release from the Cabinet Office a week or two back said that a central IT unit is being established to review the failures of PFI initiatives. Those involved will have to deal with a tall order, in that they will have to specify some particularly complex projects. However, I am glad to note that the problem is at least being tackled.
I also want to discuss the private finance initiative and the alternatives to it. Is the traditional procurement method better? I believe that it is necessary to have a robust public sector comparator in order to make the choice. Let us cast our minds back to the original PFI, which featured in the Skye bridge project. Those involved made little effort to choose a public sector comparator, because they had already decided that they wanted to build the bridge, and only private finance was available.
As the situation has developed it has got better, but mistakes are still being made. A report published this year on the first health service private finance initiative, relating to Dartford and Gravesham hospital reveals that, according to the report on the basis of which the decision was made, the PFI was supposed to provide £17 million-worth of advantage—9 per cent. of the overall cost. When the position was examined more closely, however, the figure fell to £2.5 million, a mere 3 per cent. of the overall cost. That does not call the PFI into question, but it calls into question the calculations that have been made, and in the long term it may also call into question the whole issue of the PFI.
The Select Committee noted the complexity of the issues in its twenty-third report, stating that
assessing the value for money offered by a PFI deal by comparison with a conventional project will involve comparing the value for money now with that of money later. Such comparisons can be very sensitive to the assumptions on which they are based.


That could not be more true, in the context of some of the reports with which we have been presented. It suggests that we must have a rigorous review of the choices before a PFI is undertaken, and I feel that that must include a sensitivity analysis. We have to know what the tolerances are. Given that projects of this kind last for some time, we need to know whether the PFI is likely to work to our advantage in the long term.
Another example is provided by the four road schemes that we examined last year. We used a discount factor of 8 per cent.; Treasury guidance suggests a factor of 6 per cent. That may not sound very much, but it amounted to £69 million. Although the difference was significant, it did not call the PFI into question in the short term, but if we consider the long term and the changes that are likely to occur, this may be a problem waiting to happen.
I am also concerned about the appropriate allocation of risk. Although the intention of the PFI is to transfer as much risk as possible to the private sector, that is not always appropriate, especially when the risk involved cannot be controlled by the private sector partner. The widening of the A74 in Scotland is an example. The PH payments were based on "shadow tolls"—on the number of vehicles that would travel on the road. The private sector partner cannot control that factor, which inflates the cost of the scheme.
In an earlier report, the Committee suggested that the PFI should be provided in the context of things that can be controlled: the continuing use of the road, or dealing with accidents on the road. In any event, I feel that we should allocate the risk appropriately.
My final comment on the PFI relates to compensation. This was mentioned by the hon. Member for Newbury. I refer to the transfer of risk: is the risk transferred if adequate compensation arrangements are not in place? We see the problem in all the information technology projects.

Mr. Geraint Davies: My hon. Friend has made his point accurately, and has rightly stressed the sensitivity of the question of value for money for the PFI. A critical element of that is often a discount rate in terms of the income stream, the value of the service and the assumed interest rate. Does my hon. Friend feel that we should make public the assumptions about interest rates and discount rates at the time that PFIs are agreed, or that we should simply look back in anger?

Mr. Love: I am always predisposed to make public such issues, but I agree that there may well be commercial sensitivities in some areas, and that needs to be considered carefully. But I certainly believe that we should ensure that the basis on which PFIs are arranged is robust and can be defended publicly.
Compensation is important in PFI schemes. If risk is not to be transferred back to the public sector, compensation must be commensurate with the additional costs that failure to deliver the project entails. It should reflect the cost of completion of the project, or, in extreme circumstances, the cost of redoing the whole project.
Measured against that must be the fact that any additional costs loaded on to the partner will inevitably mean an increase in the cost of the PFI scheme. That is obviously where subtle negotiations come in. The public sector started out not terribly experienced in this matter, but we are gaining experience in negotiating such

contracts. However, we did not have such experience in the past, and the NIRS contract is a case in point. That contract contained up to £100 million in compensation, but to date—at least, when the report came before us—we had received only £3.1 million. We were told that there were contractual problems and legal difficulties, but the contract should have specifically covered such matters. There is also the question of whether £100 million will be adequate to meet the losses made on the project. We need a clear outline of the contractual relationship in a PFI to ensure that everyone knows who takes responsibility for a failure and where the costs will be distributed.
The reports before us, a number of which deal with PFIs, show that in some circumstances the PFI provides value for money for public procurement but, as has been said, it is not a catch-all. Not every project will be susceptible to PFI, and we must decide where it is appropriate and where it is not.
I remain sceptical of some of the areas into which the PFI now reaches, but as a member of the PAC I am prepared to wait and see how our experience moves us forward. We should ensure that it is available where appropriate. It is not a quick fix. Everyone seems to think of the short-term gain that we need not pay for the capital costs without thinking of the longer term.
It is critical that the PFI should work throughout a project's term. It does not solve the chronic shortage of capital funds in the public sector. We should say clearly that there must be value for money for a project to go ahead. But where private sector skills are available and can be used, and innovation can be introduced to a project, we should do so: as happened to some extent on the Jubilee line, a project which was completed on time, unlike previous projects which were delayed.
The Treasury Committee is considering the PFI at present, but the public sector's experience of what it means is growing. The Government Resources and Accounts Bill will include a new vehicle for developing the PFI, and we have seen the work being done by the National Audit Office, as well as the work done by the PAC on value for money. All that will show clearly that the PFI can work in a certain way and under certain conditions on behalf of the public sector.

Mr. Geraint Davies: I want to cover a few points on information technology contracts, the private finance initiative and our views on accountancy methodology in Europe. The Public Accounts Committee is an enormously important institution in Parliament. The Government spend £5,000 on the average person in Britain—man, woman or child—and it is important that they get value for money. That is why we have 750 full-time staff considering those issues.
I want to comment on the advent of resource accounting, which I welcome because it gives the Government an understanding of asset management and cash flow analysis. I was leader of the biggest borough in London and our accounting methodology meant that we were already fully aware of our asset management and our cash flow. When Governments claim that they want best value, and that local authorities are no good at managing their funds, they should look in the mirror, because local authorities are well up on their accounting


procedures. I echo some of the points about extending the powers of the NAO to include the sort of powers that the Audit Commission has and, indeed, those that exist in Europe.
In a given financial year, the Government will spend about £7 billion across the board on IT for the Inland Revenue and Departments such as defence, health and social security. It is crucial that any lessons about value for money that we learn in the PAC are acted upon. In the 1990s, 25 cases, which were characterised by delay, confusion, lost cash and bad service to the consumer, came before the Committee. Certain Departments failed to learn from their mistakes, but, more importantly, they failed to learn from other people's mistakes. Joined-up thinking must be applied across government and the PAC has drawn together many of the lessons in one report.
In a simple business analysis one must acknowledge that mistakes can be made at certain stages when one commissions IT projects in the public or the private sector. One should start by having a clear concept of consumer requirements for the IT and what it is supposed to achieve. Often, there is no such clear concept. It is important to ensure that contracts are tight and clearly identify who is responsible for what. However, they should also include flexibility and provision for modernisation because the IT in use five years hence will be a quarter of the price and twice as effective as that of today. If we buy IT through the PFI, we may pay over the odds for in-built obsolescence in technology and service delivery that is out of date because the new user has different demands. We must bear that in mind.
My experience of implementation is that top management—for example, the permanent secretary—does not get its hands dirty and believes that a few junior managers can implement IT systems. When everything goes badly wrong, there is crisis management and all the managers have to rush in. A complete fiasco ensues, the service suffers and, often, there are no contingency plans. Delays on the IT side mean that conventional methods of providing services are not used either and chaos follows.
To illustrate my point, I shall refer first to the immigration and nationality directorate and Siemens and, secondly, to the national insurance recording system. On immigration, the number of asylum applications was approximately 35,000 a year when the previous Government drew up the contract with Siemens. That number has increased to 80,000 because of what has happened in Kosovo and the Balkans. It is easy to be clever in hindsight, but we should have a system that can cope with international turbulence such as war and massive increases in migration. The specifications in the contract did not allow for that; they could not cope and the concepts involved were not clear.
Siemens subcontracted to Perot, so it was obvious that Siemens could not do the job on its own. One wonders why we could not find a company that could do so. Perot was to provide a tailor-made system, but did a runner. We ended up with Siemens saying, "Okay, we'll produce something off the shelf." As it made the wrong assumptions—it was to have worked on the project with someone else, but ultimately had to work alone to produce something off the shelf, not tailor made—it was not surprising that things began to go badly wrong. Siemens

had planned to run a paper-free management system alongside a computer system, but the computer system was delayed.
The immigration and nationality directorate moved offices and ended up in Croydon, which is my constituency. There was chaos and the legacy is that the Minister of State, Home Office, my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche), who was previously the Financial Secretary to the Treasury, is regularly in Croydon trying to sort out the mess. It is good to see her there, but there are lessons to be learned about project management.
Unfortunately, the mistakes have been repeated in other examples that have been considered by the Public Accounts Committee. Issues such as those surrounding NIRS2 take a long time to come to light; indeed, they go back to the time of the previous Government. The Andersen Consulting bid for the contract came in at about a third cheaper than that of its nearest competitor and offered a big-bang approach under which a whole system would be introduced to a complex area all at once. After being given the work, Andersen Consulting concluded that it could not do it all at once. It wanted to do the work bit by bit and renegotiated with the Government, so the public cost exposure was widened because the original contract was suddenly not intact. There have been various other problems, but I do not have time to go into them.
Intellectual property value is important when a company gets its product right. Even though there may have been all sorts of service delays and costs for us, a company might say to Argentina, for example, "We can do your national insurance. We know how this system works because we have done the experiments in Britain." If it sells that system for an enormous amount of money in the international marketplace, should not we, as the seed-corn investor, have a profit share in respect of it? If we are to think about entrepreneurial activity in government, why not consider not only windfall profit clawback, but profit share in terms of the marketability of products developed by us in the public sector?
I was pleased that my hon. Friend the Member for Edmonton (Mr. Love) referred to the private finance initiative; he made some excellent points. The PFI is big business. The Government expect to invest about £100 million over the next four years in capital expenditure overall and about 13 per cent. of that will be under the PFI. I understand that the payback on those projects over the next 27 years will be £80 billion. The figures are big and, as has been made clear, it is important that we are able to show that it is better to go down the PFI route than the traditional capital expenditure route in terms of value for money. Capital expenditure investment is increasing in itself, outside the PFI, from £18 million to about £25 million a year by 2001.
Value for money is a big question. Underneath it—if we are to have the PFI as opposed to traditional investment—re other questions: whether there is genuine risk transfer and how that is measured; whether there is genuine innovation that is producing added value and how that is measured; whether added value will be available from the business because there will be new products that can be marketed outside the normal scope of government; and whether specialist management is available that we do not have at our disposal. We must also ask whether all those together compensate for the extra cost of capital.
In the Skye bridge example, which has been referred to, the extra cost of capital was about a seventh of the total, but we should compare that with the Jubilee line extension, to which a more conventional approach was taken. Although it was thought that it would cost £2.1 billion, the total cost was £3.2 billion. An extra £1 billion was spent and the project was delayed for a year. Under the PFI, risk is transferred because a company has to complete a task with a certain amount of money and in a certain time. If it fails, it has to pay for that. As long as we can button such conditions down contractually and if the company does not liquidate itself so that we end up bearing the cost—such a big "if' needs to be checked out through credit ratings—such a system makes a lot of sense.
The questions that we need to ask ourselves when we assess the PFI at Treasury level—and, thereafter, in the Public Accounts Committee—concern risk transfer and added value and whether they are measurable and transparent. We must also ask whether we have a negotiating team—in-house or at arm's length—that is sufficiently capable to negotiate the best deal for the public sector. The private sector will always come in and bid for more than the real cost to maximise its profits. That culture is often not relevant within government at the moment. Is modernisation built into contracts in relation to technology and service profiles?
As my hon. Friend the Member for Edmonton asked earlier, what discount rates will apply to project, and what assumptions will be made on interest rates? How sensitive will value-for-money decisions be to those rates? On confidentiality, I am an advocate of being as open as possible about discussions on the realism of rates.
Provision should be made for compensation if there are service delays or disruptions, and to claw back excess profits. However, we shall be able to apply the lessons learned from other PH projects, and the Public Accounts Committee will increasingly be examining the increasing sums provided by the Government for PFI projects.
I should like to make a few comments about the Committee's visit to mainland Europe—which occurred in the aftermath of the European Commission's resignation. Hon. Members will recall that, after the group of wise people investigated irregularities at the Commission, and the European Parliament refused to accept the Union's 1996 accounts, the Commission was forced to resign en masse.
The Committee was able to make various suggestions for improvements to financial accounting practices in mainland Europe. The European Union has a £55 billion budget, with irregularity—some caused by mistake, but other by fraud—running at 5 per cent. However, to put that into context, irregularity in the United Kingdom social security budget amounts to 8 per cent.
I should like the European Union to divide its budget into various categories, so that some sub-budgets may be passed while others receive further scrutiny. Such an arrangement would enable us to focus on real weaknesses, rather than making it necessary to invoke the collegiate system of collective responsibility, in which the stakes are all or nothing and which places the onus on the European Parliament to pass the budget, warts and all.
The Public Accounts Committee is supported by the National Audit Office and interrogates a permanent secretary, who is an accounting officer. The situation is much less clear in the European scenario.
The Court of Auditors—which should act as the equivalent of our National Audit Office, supporting the Committee on Budgetary Control—should interview Commission Directors. In practice, however, the Committee on Budgetary Control spends perhaps 10 minutes examining the report of the Court of Auditors, which is located 115 miles from the Parliament.
The Court of Auditors works very closely with the Commission—which is allowed to vet some of the Court's reports before they are sent to the Committee on Budgetary Control. Moreover, there is no single accounting officer, as the person authorising the money and the person spending the money are different people in different parts of the organisation. It is therefore no surprise that the system in the United Kingdom, and in northern Europe generally, may not bring a lot of added value to the Commission itself.
In my two years on the Public Accounts Committee

Mr. Love: An old hand.

Mr. Davies: Yes; I am a very old hand.
I have certainly enjoyed the opportunity of applying business disciplines to public expenditure, and think that we have recently made rapid progress. When I was elected to the House, however, I was surprised to learn how backward the accounting system was in relation to resource accounting. Nevertheless, the European Union could learn much from the United Kingdom.
There are many challenges ahead in improving information technology and the PFI, but I am sure that, collectively, we shall be able to help meet them.

Mr. Quentin Davies: It is a pleasure once again to find myself opposite the Financial Secretary to the Treasury, albeit in a different departmental capacity, and I take this opportunity to congratulate him very sincerely on his appointment.
This is a very special parliamentary occasion. The fundamental—the primordial role—of Parliament, ever since we were established back in the 13th century, has been to vote Supply to the Executive branch, to authorise the raising of taxes, and then to keep close tabs on the Executive branch in its expenditure of that money. The Public Accounts Committee acts in effect as the ears, eyes and arm of the House of Commons in that essential constitutional role.
We have a sense of gratitude to colleagues who serve on the Committee and do such an excellent job. That is why the Committee and the NAO system has justifiable international prestige at present. I want to pay tribute to my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), and to all colleagues on both sides of the House who have given up their time to produce 40 reports—a considerable achievement.
All the speeches today have been thoughtful, and no one has come into the Chamber to mouth slogans. Many who have spoken are members of the Committee, but others who are not have been motivated enough to sit through a long debate to make carefully considered points.
My right hon. Friend the Member for Haltemprice and Howden set out his achievements, and referred to the 40 reports and £356 million in savings—a concrete


achievement on behalf of the taxpayer. He referred to a number of interesting inquiries that the Committee had undertaken. He was harsh in his comments about the EU, and I will return to that matter. He referred to the Halton college affair. I thought that it was quite a regrettable achievement for one small further education college to succeed in malversating £6 million without anybody noticing.
My right hon. Friend referred to the challenges and problems that the Committee faced and would be likely to face in future. He said that the Government appear so far to have refused the NAO access to Oflot's records in the vetting of candidates for the national lottery. It must be of concern to us all if the Committee and NAO find difficulty in carrying out their task because of obstruction from the Executive branch. I hope that the Minister will address that.
My right hon. Friend said that 50 agencies were not covered by the NAO or the Audit Commission. Since these intermediate agencies are growing in importance in the Executive, it is worrying that so many should not be covered. Parliament deserves an explanation, and I hope that we will get an assurance from the Minister that they soon will be covered.
My right hon. Friend said that it was essential that the performance measures which were to be agreed between the Government and various Departments should themselves be subject to audit. That is extremely important, and I hope that the Government will respond favourably.
My right hon. Friend made a serious charge which should not be forgotten. The Chancellor, in his pre-Budget statement the other day, said that the assumptions and projections behind his statement had been audited by the NAO. My right hon. Friend pointed out that that was not the case for all of them. Frankly, the selective auditing of assumptions—without making it clear to Parliament which had been subject to audit and which had not—is in some ways worse than no audit at all, as it gives an entirely spurious credibility to the vital figures which appear in such statements.
The right hon. Member for Swansea, West (Mr. Williams), who has long experience in the House on both Front and Back Benches, spoke with considerable authority. He made the point that giving short-term contracts to civil servants and introducing commercial incentives into the civil services increases, to some extent, temptations and difficulties that otherwise would not have arisen. He said that that may be a threat to the culture of the civil service, and while I do not know how much of a problem that is likely to be in practice, we must be alive to the possibility. The right hon. Gentleman made some useful points.
The hon. Member for Newbury (Mr. Rendel) dealt with the NIRS2 computer fiasco. The Liberal Democrats are normally so sycophantic towards the Government, but he made it clear that he regarded the matter as being their fault, not—as the Government often try to pretend—that of the previous Administration.
The hon. Member for City of Durham (Mr. Steinberg) alleged serious miscalculations by the Treasury in managing several major privatisations, including nuclear power and Railtrack. I did not always find his financial

logic easy to follow, but I hope that he and the Government would agree that it is important that investment or divestment decisions are taken entirely on the basis of marginal costs or marginal return, and not sunk cost. For a moment, I thought that the hon. Gentleman was suggesting the latter, but that would be a serious error that would cause great economic damage to this country. When comparing marginal costs, one must compare the potential return keeping an asset in the public sector to the return that would be obtained by selling it, which would constitute a capitalisation and a lump sum. It is no use saying that a privatisation should not be carried out because the return for the private organisation that takes over the activity will be much higher. Of course it will, and that is why the private sector bid for it. The efficiencies resulting from the privatisation are reflected in the price.
My hon. Friend the Member for Bexhill and Battle (Mr. Wardle) dealt with national savings, which are important to many small savers. He also made the original suggestion that agencies should think about setting up in-house IT units instead of contracting out or buying in that service. The proposal would need much thought, but those with responsibilities in that area should think very carefully about it.
The hon. Member for Liverpool, Garston (Maria Eagle), who is leaving the Committee, gave us an elegant swan-song in which she coined a couple of useful phrases. She said that the Committee and the National Audit Office should have a "financial right to roam", and I agree. That right should not be constrained, although my right hon. Friend the Member for Haltemprice and Howden claimed that that is what is happening. That is worrying. The hon. Lady also said that if taxpayers' money is involved, the Committee should be allowed to pursue it. That principle could not have been better expressed.
My hon. Friend the Member for South-West Hertfordshire (Mr. Page) dealt with two matters. He was severe about the European Union and the Commission, and he also made several important points about the relationship between the Government Resources and Accounts Bill, the National Audit Office and the Committee.
The hon. Member for Brent, North (Mr. Gardiner) mentioned cervical screening, which was the subject of an important report. He reminded us that the issue involved not just money, but life and death. I think that he said that cervical cancer causes 1,300 deaths a year, although I cannot confirm that figure. If that is so, one would hope that that number could be brought down rapidly, because the assumption must be that if earlier diagnoses were possible the great majority, if not all, of those women could be saved.
When I read the report I was also struck by the Committee's strong strictures about the local management of Kent and Canterbury hospital. Page viii of the sixty-ninth report of the 1997–98 Session says:
They deserve the severest censure for doing nothing about those problems and for bottling them up within the Trust".
Something should have been done about that, and it sounds to me as though several people who had been exercising executive functions in the trust ought not to be exercising them today. I hope that they are not.
The hon. Member for Hazel Grove (Mr. Stunell) dealt with the twelfth report, on energy efficiency, and very properly criticised the Government for the inefficiency of the handgun compensation scheme.
The hon. Member for Linlithgow (Mr. Dalyell), who is still internationally known as the hon. Member for West Lothian, made a passionate speech about the danger of drug abuse and the problems of controlling international money laundering. That is relevant to our debate because those problems were touched on in the fifteenth report.
The hon. Member for Edmonton (Mr. Love) made several telling points about the private finance initiative. He rightly said that the PFI can all too easily become a way of disguising reality and cooking the books rather than a way of providing economic benefits for the nation. PFI is an important and positive development in itself, but a degree of healthy scepticism about it is appropriate.
The hon. Member for Croydon, Central (Mr. Davies), who knows quite a lot about business and IT, said that some of the mistakes that had been made in the IT-related schemes had involved the specifications rather than errors by the contractors, who had had to take over projects on the basis of the specifications. That is interesting, because the hon. Gentleman normally defends Ministers, and if when computer systems go awry the fundamental errors are in the specification, clearly it is the Government rather than the contractors who are largely to blame.
The hon. Gentleman also said that when contractors have learned things at the expense of the British taxpayer by pioneering a new system—they may not have done it well, but they will have come away with valuable know-how—the Government should share the benefit. That is a good idea. The Government have missed another opportunity in failing to grasp that idea and include it in contracts where possible. There could be a provision for a royalty or other payment when know-how acquired as a result of carrying out a particular contract is subsequently sold on by the contractor to customers elsewhere in the world.
It would be wrong for me to finish speaking without saying on behalf of the Opposition what conclusions we draw from the debate. As I have said that the debate is important and the subjects pertinent, and that they have been dealt with in a serious fashion by the Committee, if I did not now give our point of view it would be something of an abdication on our part.
Reading the reports, which was necessary homework for the debate, is a salutary if somewhat depressing exercise. It is clear that things are not quite as well conducted in our administration as most of us would like to think.
I was struck by the criticism of the European Commission from both sides of the House, and by the strong language in the Committee's report on that subject. The House knows me well enough to realise that I am not one of those who simply gloats over any and every criticism of the Commission—on the contrary. None the less, the criticisms must be taken seriously. If one believes that the Commission is a vital body, and in many ways has a fine record as a bureaucracy, it is even more worrying that there should be such substantial flaws in what we might call the "back office"—the aspects concerned with administration, implementation and financial control. I think that we all look to Commissioner Kinnock to bring about some real changes. All hon. Members know him and sincerely wish him well, even though opinions about him differ. As Commission

Vice-President with responsibility for administration, Mr. Kinnock is the senior British Commissioner. He has a vital job and faces a great challenge. I hope that the Committee will go back to Luxembourg, Strasbourg and especially to Brussels before it reports on the Commission again in a couple of years or so. It is extremely important that some real improvements are evident.
I turn now to the NIRS computer system. It is clear that a bad mistake was made in August last year, when the system was accepted. The Public Accounts Committee is never party political, but paragraph 4 of the report on NIRS published in June states:
Fifteen months after we first took evidence from the Contributions Agency the situation is much worse. The system is still not fully operational.
That was bad, but far worse was the complacency of the Government's response to the crisis, of which the House should be much less forgiving. Only last autumn, the Secretary of State for Social Security said that the matter would be resolved in a few weeks. Either he did not know what he was talking about, or he was trying to pull the wool over the eyes of hon. Members about a very serious matter. That was insouciance bordering on recklessness, and the House deserves an apology.
Another theme that emerges from the Committee's analyses of failures and problems has to do with the Home Office. It cannot be a coincidence that nothing that the Home Office does goes right. We have had the disaster with handguns, and the shambles in the immigration department. The Committee has not yet had a chance to examine the shambles in the Passport Agency, but I hope that a National Audit Office report on that matter will be available to the House fairly soon. The Home Office seems incapable of running anything with even a modicum of efficiency.
Finally, the Government Resources and Accounts Bill, which will be given its Second Reading on Monday week, was referred to several times. The Bill gives the Government a wonderful opportunity to enhance the transparency and the reality of the figures presented to the electorate. It is also a wonderful opportunity for the Government to increase the rationality and efficiency of their operations, so that better decisions in resource management are taken.
The Bill is a superb initiative and we have welcomed it, in principle, from the beginning. However, it contains some enormous lacunae. Vast areas of Government revenue and expenditure are not covered, and some of the most important areas of liability—including the national insurance system, and pensions liabilities that must amount to some £200 billion at least—are simply omitted.
I hate to think what would happen to someone in the private sector who produced a company balance sheet that left out what amounts to a fully owned subsidiary—in this case, the national insurance system. Such a balance sheet would disguise from readers one of the most pertinent liabilities of that private sector company, but the Government seem to think that they can get away with such conduct. I hope that they will think again on that matter, and on the many other important issues that have been raised this afternoon.

The Financial Secretary to the Treasury (Mr. Stephen Timms): As always, it is a pleasure to follow the hon. Member for Grantham and Stamford (Mr. Davies), and I thank him for his kind words.
I have listened with great interest to this debate, in which many valuable points have been raised. I hope that, unlike my predecessors, I will be able to listen to the debate when it comes around again in a year's time. First, though, I want to thank the Public Accounts Committee for its hard work over the past year. The Committee's Chairman, the right hon. Member for Haltemprice and Howden (Mr. Davis), said that it had produced 40 reports in that time. I look forward to the opportunity of attending a meeting of the Committee as a member before too long. I thank the Chairman and other members of the Committee for their welcome.
Since the last debate of this kind in January, the Committee has continued to work with its customary diligence. In an excellent and elegant speech, my hon. Friend the Member for Brent, North (Mr. Gardiner) illustrated well how the reports have great influence for good in individual localities such as his constituency as well nationally.
One of the main reasons why the Committee continues to have such an impact is that it is extremely well served by its Chairman. He exhibits not only great energy and enthusiasm, but real concern about standards of behaviour and value for money in Government. That is a powerful combination, for which we are indebted to him.
I should also like to thank other members of the Committee, who have worked very hard, particularly my right hon. Friend the Member for Swansea, West (Mr. Williams), the senior member of the Committee. When I was first elected to the House, a member of my local constituency party advised me that if I wanted to be effective, I should emulate my right hon. Friend, particularly with regard to his work on the Committee. I have watched his contributions since then with the greatest interest, and concluded that that tribute was well deserved.
I thank the Comptroller and Auditor General, Sir John Bourn, the head of the Northern Ireland Audit Office, Mr. John Dowdall, and their staff, for all the valuable work that they have done over the past year. We are indeed very fortunate to be served by such excellent auditors.
One of the main ways in which the Government are seeking to improve the quality of our public services is through the modernising government initiative. The National Audit Office has an important part to play in making the initiative a success, not least by carrying out studies in the relevant areas. The Government would welcome, for example, studies of cross-cutting initiatives and how to make better use of new technologies. We do not claim to have all the answers, and are keen to expose those areas to effective scrutiny.
Fear of how auditors will react to new ways of doing things is often cited as a reason for sticking to time-honoured ways of working. But Departments need to adapt if they are to exploit all the opportunities that are opening up. That is why I particularly welcome the statement by the Public Audit Forum in the White Paper "Modernising Government" that auditors will support well thought through risk-taking and experimentation. The

Committee Chairman said that today, and my right hon. Friend the Member for Swansea, West also spoke about the importance of innovation. I hope that officials at all levels will take note.
We are grateful to the Public Audit Forum for a number of things, as well as its statement in the White Paper on modernising Government. I welcome that initiative as well as the co-operation between our national audit agencies, which is demonstrated by the forum's work, and the determination of auditors to think positively about the major issues facing the Government, and how they can contribute to achieving worthwhile change.
The Government also aim to secure better service delivery through involving private partners. I welcome the Committee's work on getting better value for money from the private finance initiative and the thoughtful remarks of my hon. Friend the Member for Edmonton (Mr. Love). Since the election, we have signed more than 140 deals involving capital investment by the private sector of nearly £5 billion to deliver better services over a wide range of activities. But there is still undoubtedly scope for doing more. Following the recommendations of Sir Malcolm Bates, we announced in July the creation of a new private sector-led body, Partnerships UK, a private company with a public mission. That is a practical response to the key lessons outlined by the Committee in its 23rd report.
A number of hon. Members have spoken about the Committee's work on privatisations. My hon. Friends the Members for Liverpool, Garston (Maria Eagle)—whom I congratulate on her well deserved appointment—and for City of Durham (Mr. Steinberg) made some telling points about the way in which privatisations were handled, particularly Railtrack and British Energy. The Committee drew important conclusions about that. Both those firms were affected by the windfall tax, which offered comfort to some hon. Members. The Railways Act 1993 required that Railtrack should be sold as soon as was practicable, and that was the source of some subsequent difficulties.
Several hon. Members have talked about the Government Resources and Accounts Bill, which I agree is the most important change in central Government financial accountability since the initiative of Mr. Gladstone of which we heard earlier. The Bill will enhance the quality of financial information available to the House and will enable Departments to manage resources more effectively. I am glad that that move has been welcomed and that it is not contentious.
Implementation is well under way and progress is being monitored, assessed and reported. The hon. Member for Hazel Grove (Mr. Stunell) asked for chapter and verse on progress. I can tell him that Departments are submitting dry-run resource accounts to the NAO for audit, with a view to meeting trigger point three. The next trigger point will come when Select Committees receive dry-run resource-based estimates from Departments for the coming financial year. Further reports on progress and policy will come before the House, and the Bill provides for the preparation of whole-of-government accounts, allowing the expansion of the principles of resource accounting to accounts for all public sector spending.

Mr. Stunell: Will the Minister give way?

Mr. Timms: I apologise, but I cannot.
The right hon. Member for Haltemprice and Howden suggested that the Bill should extend the NAO's rights of access in several areas. I am not persuaded of the need for that, but the matter will be fully discussed in the coming debates on the Bill. The right hon. Gentleman suggested that the NAO should audit all non-departmental public bodies, but it was agreed some time ago that the NAO should have inspection rights for all those bodies, so it already has the access it requires if it is to follow up points of concern.
As it happens, the NAO has been asked to audit all bodies established since the general election. However, each case should be considered on its merits rather than our imposing a one-size-fits-all policy on such bodies. I do not rule out the possibility of extending rights of access by administrative means in agreement with relevant Departments, where it may be necessary to provide effective audit or to help to promote well thought through innovation and risk-taking. I look forward to discussing such matters with the Comptroller and Auditor General.
The right hon. Member for Haltemprice and Howden and the hon. Member for Grantham and Stamford asked about NAO access to Oflot. I am sorry that the Committee has not yet had a response to its request for access to Oflot's books. The request raised difficult legal issues, which have taken some time to resolve. Matters are progressing, and I hope that the Government will be able to give the Committee a response soon.
The hon. Member for South-West Hertfordshire (Mr. Page) suggested that the Bill would curtail access currently available to the NAO. I can assure the House categorically that Ministers have no intention of curtailing existing access. The Government also categorically intend that the Comptroller and Auditor General will continue to report to Parliament, and not to the Treasury or anyone else.
The right hon. Member for Haltemprice and Howden asked about NAO audit of performance information. Reliable systems should be in place for measuring and monitoring performance, but I am not sure that mandatory external validation by the NAO is necessarily the best way forward. Several issues will have to be considered further as performance reporting policy develops. We shall keep the point under review, and I am aware of the excellent work of the Audit Commission among local authorities, which was mentioned by my hon. Friend the Member for Croydon, Central (Mr. Davies).
I was asked about audit of the assumptions for the Budget. The Comptroller and Auditor General conducts those audits on the principles set out in the Finance Act 1998. The role of the NAO is formalised in the code for fiscal stability. I remind the House that this Government and this Chancellor have gone much further than any other in opening up their assumptions on public finances to public scrutiny. I am sure that the Committee has welcomed that development.
European Union reform was mentioned by a number of hon. Members. Those issues were discussed in the Committee's 29th report. We agree wholeheartedly that fundamental reform is needed. The Prime Minister himself called for root-and-branch reform. The new Commission has taken action, which is encouraging. Neil Kinnock chairs a group of commissioners to push forward the reform process and they will be setting out detailed reform proposals next February. He has also published a

route map for reform, to set out milestones up to next February, including a new whistleblower's charter. I am glad that the right hon. Member for Haltemprice and Howden has been in discussion with him. I welcome the Committee's continuing interest in the matter.
I thank my hon. Friend the Member for Linlithgow (Mr. Dalyell) for his courtesy in letting me know that he wanted to raise issues associated with the fifteenth report. I will ensure that, as he requested, he receives a copy of the response to it, setting out our arguments in detail. He was right to identify the drugs problem as one of huge importance and one that has a high priority for the Government.
Of course, unnumbered bank accounts are prohibited within the United Kingdom. In the case of the overseas territories, including the Cayman Islands, we have instituted a new independent review of the system of financial regulation that is in place to plug any gaps between it and international best practice. In that way, I hope that we will be able to deal with any difficulties that remain there.

Mr. Dalyell: Will my hon. Friend give way?

Mr. Timms: If I may, I will carry on, but I will be happy to discuss the matter further with my hon. Friend.
The hon. Member for Hazel Grove asked me to confirm that the Treasury, the Department of Trade and Industry and the Department of the Environment, Transport and the Regions are working together on environmental issues. I certainly can do so. The recent announcements by my right hon. Friend the Chancellor on the climate change levy are a good illustration of that and have been welcomed by environmental organisations and industry.
My hon. Friend the Member for Garston gave the House a rightly shocking account of the irregularities at Halton college. I am glad that she was pleased with the Government's response. A clear theme that runs through a number of the Committee's reports is that problems could have been avoided by compliance with sound financial and management controls. We are committed to matching best private sector practice on developing such systems.
In the case of the Public Trust Office, it has been acknowledged that the Committee's conclusions demand a fundamental programme for change and the Lord Chancellor will be making a statement in February on the reforms that he proposes. I am pleased with what the right hon. Member for Haltemprice and Howden said about the response of the permanent secretary at the PTO, even if he is not the Committee's pin-up. It would be interesting to know who is that pin-up—we have heard about a number of people who it is not.
Several hon. Members mentioned information technology problems, about which I am also concerned, including the problems with NIRS2, with which I am very familiar. There has been no complacency. The system was supposed to be up and running by February 1997, before the general election, so it is a bit rich for the hon. Member for Grantham and Stamford to attempt to blame the Labour Government for those problems. Like all of us, I regret the problems caused to many pensioners and others by NIRS2 delays. The difficulties are thankfully largely, although not entirely, behind us.
Of course, there have been examples of IT projects that have gone well, but some have gone badly. The Government have established a review team to study how things can be improved, as has been mentioned. It is located in the Cabinet Office central IT unit so that it can work closely with officials developing the Government's corporate IT strategy. The team includes representatives from throughout Whitehall and the private sector. I am particularly pleased that it will include someone from the National Audit Office.
We have had an interesting debate, which has demonstrated the wide range and importance of audit and accountability issues. I very much look forward to dealing with those issues in the months to come. I can assure right hon. Members and hon. Members that I have taken careful note of all the points that have been made and will reflect further on all of them. I am sorry that I have not had an opportunity to respond to all the points that have been made as fully as I should have liked, but I am grateful to the House and to all those who have spoken in the debate and taken the opportunity to put their views forward.

Question put and agreed to.

Resolved,
That this House takes note of the 68th and 69th Reports of the Committee of Public Accounts of Session 1997–98, of the 1st to 38th Reports of Session 1998–99 and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on these Reports (Cm 4279, 4285, 4312, 4335, 4380, 4381, 4394, 4408, 4456, 4469, 4471 and 4515).

Orders of the Day — COMMITTEES

Ordered

Environmental Audit Committee

That Mr. Gareth R. Thomas (Harrow West) be discharged from the Environmental Audit Committee and Mr. Jon Owen Jones be added to the Committee.

Procedure Committee

That Chris McCafferty be discharged from the Procedure Committee and Mr. Tony Banks be added to the Committee.—[Mr. McNulty.]

Orders of the Day — Bus Services (North Derbyshire)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McNulty.]

Mr. Harry Barnes: I need to declare an interest in the subject of the debate, in that I do not have a car—I cannot drive—and therefore I make use of bus services in north Derbyshire, as well as taxis, in order to get around my constituency. The focus of the debate is the area covered by north-east Derbyshire bus services, as defined in their timetable. The timetable shows that 60 per cent. of the routes are run by Stagecoach Holdings plc and 15 per cent. by First Mainline; the remaining 25 per cent. are run by eight other companies—most of which are very small.
That is reasonably typical of the national pattern for bus services. Since bus deregulation in 1985, a system has developed in which several big private players dominate the market, while smaller players tend to receive the bits and pieces—the scraps. In 1997, 53 per cent. of the national turnover in bus revenues went to three companies: Arriva plc, FirstGroup plc and Stagecoach Holdings plc. In a submission to the Transport Sub-Committee of the Select Committee on the Environment, Transport and Regional Affairs, Stagecoach Holdings pointed out that it
is the UK's largest integrated transport company, with interests in bus, rail, tram, ferry, road tolling and airport services in eight countries. Stagecoach's UK bus operations stretch from the Scottish Highlands to the South Coast of England and account for 16 per cent of the UK bus market.
Everyone is aware of the ruthless competitive techniques employed by Stagecoach in order to acquire its bus empire. In its report on tendered bus services of 28 July this year, the Transport Sub-Committee concluded:
we are very concerned that the market dominance of the major transport groups and the existence of monopolies, possible cartels and other anti-competitive practices are diminishing competition and are also driving prices higher.
Before deregulation, north-east Derbyshire was well served by publicly owned bus companies, Chesterfield Transport and the south Yorkshire passenger transport executive, with a policy of cheap fares that was a credit to the area, and which fed into the provision of services in my constituency. People who write to me look back to that time as halcyon days for bus transport in our area, compared with current provision.
I shall deal mainly with Stagecoach, although I shall mention other companies. Typical of past complaints that I have made to Stagecoach East Midlands is my letter of 23 September 1997, in which I stated:
I have received complaints from constituents about the standard of your service on the number 51 bus route, between Danesmoor and Chesterfield.
It is claimed that the service provided fails to match-up to timetable commitments and that at times a promised 20 minute service is lucky to operate hourly.
Initially, I received a holding reply. An investigation was supposed to be taking place, but I believe that the company apologised for not fully completing it. On 3 February 1998, I received a final reply to my letter. Stagecoach said:


in order to keep you up-dated on events I can report that several changes have now taken place on the service 51/52 and this has been mainly to do with the way in which we work a driver and a bus.
The main change mentioned was as follows:
In basic terms we have provided drivers with sufficient lay-over' time in Chesterfield at the end of each journey from Clay Cross such, that if they experience late operation due to traffic congestion then ample compensation exists (as much as 20-25 minutes in some cases) and thus the driver has enough time to operate 'his' next journey from Chesterfield on time.
The drivers of Stagecoach buses would be astonished by that statement. Later I shall describe the problems that they have in meeting the times stipulated for their journeys.
I recently checked with one of the complainants who had prompted my original letter, to find out whether things had picked up in the two years since I had taken up the matter. She says:
After your letters to Stagecoach the service did appear to improve for a while but soon returned to the poor service which we received before.
I am totally dissatisfied with the lack of regular buses on this route.
Spending many a moment waiting at the bus stop in the hope of a bus arriving on time or even at all I have spoken to many people about the service and it has replaced the weather as the general topic of conversation.
She concludes:
The general opinion seems to be that Stagecoach are so big that they can do what they like.
I hope that that does not prove to be the case, and that this debate prevents it from becoming so.
In late August 1999, I received two detailed complaints from constituents—one about route 79, from a constituent who lives in Barlow, in a rural area, and the other about route 44, from a constituent in Coal Aston, which is at the end of a more urban area.
I decided that there would be little use in raising the issue again with Stagecoach East Midlands, so I started to complain to a wide body of people. I wrote to the Minister for Transport, to the traffic commissioners, to the National Federation of Bus Users, to Stagecoach's headquarters in Perth as well as its east midlands office, and to Derbyshire county council about the sponsored services that Stagecoach runs on its behalf. I had previously been in touch with the council many times in connection with such complaints.
I also issued a media release and wrote two articles in the local free newspapers, covering about 40 per cent. of my constituency. As a consequence, I received 76—often detailed—letters, complaining about specific Stagecoach services. They included two petitions, two complaints from parish councils, one from an estates committee and one from a school. It might be felt that if the MP issued a press release and engaged in publicity, he was engaging in stimulating complaints; but the thing that—apart from my own experiences—shows me that the complaints are genuine is the fact that they come from such a wide range of communities throughout north-eastern Derbyshire. There are hardly any collections of letters from specific areas. The complaints refer to different areas, different provisions and different routes, although in some cases they deal with long bus routes that pass through several communities.
I received 76 complaints about Stagecoach, six about First Mainline's services and one about the Trent bus service, which is one of the smaller operators in the area. On the other side of the coin, I received two letters praising Thompson bus services in Dronfield. Many of the letters complaining about Stagecoach and First Mainline point out that Thompson's services compare fantastically with those provided by Stagecoach. One letter has praised Aston Express services, and three other letters are of great interest in that they clearly point out that the drivers are not to blame for the problems. Those letters were not written by bus drivers, so they make an important point.
I met the Transport and General Workers Union branch of bus drivers at the Chesterfield depot and I met the RMT branch at Hollingwood. Although RMT is a rail union, it organises bus drivers and I attended a full and vigorous meeting with its members. They told me—and they showed me—that they have terribly unrealistic time sheets that do not allow them turn-round times and that they are under terrible pressure to meet their targets. One driver told me that the company expects him to be a racing driver, not a bus driver.
Complaints were made about the training at Stagecoach. Drivers have to pick up passengers on routes that they do not know. No other bus driver is present to show them the way and they are handed a sheet to tell them where they should turn. The drivers at the trade union branch meeting scathingly described those time sheets as "idiot sheets".
The problems have been described in a letter from a constituent who pointed out that, in rural areas, services are provided only at hourly or two-hourly intervals. This case involved an hourly service. One bus did not turn up, and people had to wait for the next one. The next driver was new and did not know the way. He took some wrong turns—passengers often have to tell drivers that they have gone the wrong way—and arrived 20 minutes late. That meant that the passengers had to wait one hour and 20 minutes. Their frustration was then taken out on the driver, who was himself frustrated because he did not know the route well and now had to face a group of angry people. It is little wonder that there is a great turnover of drivers.
I have met representatives of Stagecoach East Midlands and given them all the 76 complaints that I have received. To date, 73 replies have been received by my constituents and I have been given copies. I send each copy to the traffic commissioner who has already received copies of my constituents' original letters.
The complaints take three forms. First, on numerous occasions, buses do not turn up. It is common for a bus to be missing entirely. Secondly, buses arrive extremely late for some of the reasons that I have described. Thirdly, buses may miss out areas altogether, so people may be waiting for buses that are running but which have not turned up at a particular stop.

It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.[Mr. McNulty.]

Mr. Barnes: A driver may ask, "Is there anyone on the bus for Arkwright?" If no one replies, the bus will miss out Arkwright, and the people who are waiting at Arkwright will not be picked up.
Connections can be missed. Much of my constituency is rural, and in rural areas the waiting period for a bus may be up to two hours. If a connection is missed, the wait for the next bus will be an hour or two. In rural areas where there are no facilities, people can do nothing but stand at the bus stop, which may be uncovered, and wait for the next bus to arrive. Passengers have to resort to using expensive taxis to get to hospital appointments or to work. People fear that they will be late if they use the bus because it has made them late on other occasions and they have worried about keeping their job.
I am told that when people ring up Stagecoach, they receive poor responses to their complaints because there is no link to the buses and no feedback, so no one knows what is occurring or what the problem is. Some people receive apologies, especially if they write in, and they may be sent mega-tickets that allow them free rides over a day or a week. That does not impress my constituents because they want improved bus services, not free rides on buses that may not turn up or may be late. People complain also about the poor quality of the buses and about breakdowns, which account for some of the problems that I have mentioned.
I have touched on some of the drivers' complaints, but I shall restate them. They complain of unrealistic timetables, inadequate meal breaks, demands from the company for what they see as excessive hours, not enough rest from work and traffic regulations that are ignored by the company or dealt with inadequately. There is also the problem of inadequate training, which I have explained.
I have received responses to various representations. On Stagecoach, I have heard that the traffic commissioners are in the neighbouring area of Mansfield. Stagecoach has brought in extra drivers and buses from Scotland to try to handle the situation, which may be spilling over into Chesterfield and its surroundings, the area that I am concerned about.
Stagecoach at Perth has not yet responded to my request for a meeting. Initially, it suggested a meeting and I asked it to wait until passengers had complained in full, but I said that I would meet Stagecoach East Midlands in the meantime. When I wrote back a few weeks ago, requesting a meeting to be held in the Commons, perhaps involving MPs with neighbouring constituencies, Stagecoach did not respond.
The response of the traffic commissioners is that they have called Stagecoach for an interview. They have issued it with a formal warning in the Mansfield and Chesterfield area, and they will continue to pay attention to Stagecoach. That interest has been extended to First Mainline, to which a number of complaints have referred, although not in as much detail as the complaints about Stagecoach.
I have received a letter from the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Streatham (Mr. Hill), pointing out that the traffic commissioners have been contacted by his Department and that operators have recently lost registrations and licences in Cambridge and Bristol. I believe that Stagecoach was involved in Cambridge.
The county council's public transport manager has met Stagecoach East Midlands and is pressing for reliable services. The National Federation of Bus Users cannot

follow up collective complaints, but I have an option of pushing 83 individual complaints if things do not get better.
What am I after? In the short run, I want buses to meet their timetables in some reasonable way. I recognise that there are some serious traffic problems in the Chesterfield area. Transport moving through Chesterfield from east to west faces considerable problems, but timetables need to be realistic and take those problems into account. Drivers should have a fair and reasonable opportunity to meet them.
The traffic commissioner has powers to fine a company such as Stagecoach 20 per cent. of its eligible fuel rebate. The problem is that the provision applies to the entire company, so the situation is different for large and small companies. Given the seriousness of the problem, I hope that such a fine on Stagecoach will be considered.
The traffic commissioners can enforce the running of services according to registered specifications. Those powers must be fully used and they might need to be added to so that they operate properly. If Stagecoach cannot deliver, having been given a reasonable opportunity to adjust the standard of its services, it should cease to be a provider in our area. The county council needs to consider its contracts and decide whether rural areas are being properly served by the company.
In the long run, I should like strong legislative measures. I hope that the forthcoming transport legislation will introduce strong regulation and will give priority to buses through the establishment of bus lanes and other measures. I hope that we can return to publicly owned public transport provision in many areas. In 1985, 75 per cent. of the turnover was through public service bodies that were owned publicly. By 1997, that figure had dropped to 7 per cent.
I have two further points. We are moving towards a national concessionary fares scheme, provided for in the July 1998 White Paper. That cannot achieve its objectives unless buses turn up on time. Elderly, infirm or disabled people are placed in the greatest difficulties by the problems with bus services in my area, but young people are also affected. One of the complaints came from a school. I have been to three schools recently on a UNICEF initiative to enable children to tell their opinions to their Member of Parliament. The problems of bus services were raised each time, which shows that it is a common topic of conversation and worry for many people. For the elderly, the north-east Derbyshire experience shows the importance of national concessionary fare schemes and their delivery and operation.
Secondly, we need a better procedure for handling complaints. The National Consumer Council is pressing for this and makes that point in its document "Better Buses". The system should tackle the regulation of complaints. Members of Parliament should have an interest so that they can feed material in, but they should not have to mobilise a campaign, forward many letters from constituents to all the appropriate authorities, and get an Adjournment debate to set things right.
Parliament should pass legislation that enables such things to be done fairly automatically through a self-regulating system into which people feed their own ideas. The job of the MP should be to keep an eye on things to ensure that they function properly. I find too



often that they have to be expert deliverers and office staff in connection with all sorts of problems apart from buses, such as the Child Support Agency and benefit provision. Legislation needs to set up the right systems so that things work well.

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): As is usual, I congratulate my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) on securing this debate. I also thank him for his courtesy in giving me notice of the main issues that he wished to raise. Finally, I express my solidarity with him as a fellow non-driver and regular bus user.
My hon. Friend described the north Derbyshire picture. It has urban centres in Chesterfield and other, smaller towns. Mansfield in neighbouring north Nottinghamshire is looked to for some facilities and there are extensive stretches of countryside. The uneven distribution of population, employment and facilities means that good planning is essential for the successful delivery of public transport services. It is disappointing if planning and delivery in the area are not adequate.
Most of my hon. Friend's concerns relate to Stagecoach East Midlands operations. He also referred to First Mainline, another operator in the area, but its services should improve as replacement of its vehicles is completed. Its routes have also been affected by redevelopment work in Chesterfield town centre that will not be completed for some time. I understand that, in the meantime, the company is doing what it can to minimise disruption.
Stagecoach East Midlands enjoys good relations with the local transport authority, Derbyshire county council. However, there have clearly been shortcomings in its performance in north Derbyshire. As my hon. Friend said, on 1 November, the traffic commissioner issued Stagecoach with a formal warning about failure to operate local bus services in accordance with registered particulars, and has told it that further formal monitoring of services will take place at Mansfield and Chesterfield in the near future. The commissioner has powers to impose fines on operators by repayment of fuel duty rebate, to place restrictions on running services and, ultimately, to revoke a company's operating licence. Those are powerful sanctions, so it is much in the company's interest to respond positively and comprehensively.
It is only fair to add that when my hon. Friend raised the company's performance, and before it attended its formal interview at the traffic commissioner's office, it was already carrying out its own review of local services and discussing proposals for improvements with Derbyshire county council. It had not yet implemented all the changes, but was at least responding positively to its own recognition of the need for better service. I welcome that fact as an indication of professionalism in the industry and in that particular company, but it has been salutary for my hon. Friend to raise the profile of this subject. I am sure that the company will welcome the fact that improvements that it makes will gain more effective local publicity as a result of my hon. Friend's keen interest.
My hon. Friend has detailed a wide range of problems voiced by the Stagecoach work force. Clearly these give serious cause for concern. The company itself will be the

party most concerned of all, and I trust that it will want to do all it can to address the problems, working closely with all employees.
In the Government's view, Derbyshire county council has played a constructive part in attempting to sort out the recent problems. The authority takes its transport responsibilities seriously and expects to spend about £2 million this financial year on loss-making bus services that are socially necessary. Derbyshire has built positive working relationships with the bus operators and appreciates their co-operation in providing services in rural areas, even though that may have led some companies to overstretch themselves. That may be a factor behind some of the recent difficulties.
Serious efforts are under way to improve bus services, but ultimately, only if the current failings are fully addressed will we have any reason to consider the job well done. This is not a time for complacency. We all want an improvement in bus services in north Derbyshire, not least because of their importance for the integrated transport approach that the county council wants to pursue through its local transport plan. Local transport plans have been introduced this year as the basis for Government funding for local transport priorities. The extra £700 million, provided over three years through local transport plans, is enabling the Government to redress the underfunding of transport that the previous Government permitted.
The Derbyshire local transport plan, like those from the other local transport authorities in England, was submitted to my Department some weeks ago and is under detailed consideration. When that consideration is completed, we shall announce the Government's transport funding allocations to authorities. Until then, it would be premature to comment on the Derbyshire plan in any way that might pre-empt that process. However, I can say that the plan envisages significant improvements to bus services through the development of bus quality partnerships, of which there are now 130 across the country. The Government endorse the concept of bus quality partnerships and have been pleased with the encouraging results that they have produced in areas where they have already been developed. They are typically increasing bus patronage by between 10 and 20 per cent., and in some cases by more.
I see no reason why similarly good results should not be achievable in north Derbyshire, and I am sure that Stagecoach East Midlands and other operators, together with the county council, will want to give the concept careful consideration. Bus companies in other areas can affirm from experience that bus quality partnerships bring benefits to operators as well as to passengers. A statutory basis for bus quality partnerships will be established in the forthcoming transport Bill.
There are unparalleled opportunities for public transport in the positive climate that the Government have fostered. Awareness of the benefits of using public transport has risen sharply over the past couple of years, with the Government responding to the trend and stimulating it further through proactive policies to develop an integrated transport system that is safe, efficient, clean and fair.
Government support for rural buses—an extra £170 million over three years—has already resulted in 1,500 new or enhanced services across the country.


Derbyshire county council has been awarded £714,000 a year for each of the three years, and is using that on provision of new services. That is in addition to the county council's success in the rural bus challenge 1998, through which £800,000 was made available to develop public and community transport provision in the south of Derbyshire. The outcome of this year's rural bus challenge bids will be announced by the end of the year.
The bus is a particularly flexible and accessible mode of transport. Buses are a lifeline for many people, who, without them, would experience limited and disadvantaged lives. I am glad that, after 50 years of decline, bus patronage is now increasing. When I speak to bus operators, I find that they are generally optimistic about the future of their industry.
Last week, at the first ever bus summit, my right hon. Friend the Deputy Prime Minister acknowledged that most of the industry was rising to the challenges involved in modernising British bus travel. The follow-up to last year's transport White Paper—the first White Paper on that subject for 20 years—included a document devoted to buses. Its title, "From Workhorse to Thoroughbred", employs a metaphor drawn from another mode of transport, but it sends a clear signal in regard to how the bus industry is transforming both its operations and its image.
That does not mean that there are no problems. Fifty years of decline cannot be reversed overnight. The bus industry has seen many lean years of underinvestment by

both the public and the private sector; passenger confidence has declined, as has the public image of bus transport. Pressure on resources has presented local authorities with hard choices about which bus services to support, and the resulting decisions have meant a reduction or withdrawal of services in some areas.
The problems are being solved, however. Private investment in the bus industry is now 80 per cent. higher than it was five years ago. In the last financial year it reached £300 million, much of which was spent on new vehicles with improved passenger access. Local authority investment in bus lanes and other priority measures is increasing, because my Department's support for local transport packages is almost 60 per cent. more this year than it was last year. At the bus summit last week, we announced new national targets for bus reliability and investment, and new arrangements to make operators more accountable to passengers. The transport Bill will contain further measures to help deliver the service that bus passengers deserve, thus meeting the commitments in our manifesto and our White Paper.
This improving climate is widely welcomed by local authorities, transport operators, user groups and many sections of the public. It provides a good basis for resolving the current difficulties and enhancing services further to benefit the north Derbyshire travelling public.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes past Seven o'clock.